Should You Think About Buying Dufry AG (VTX:DUFN) Now?

Dufry AG (VTX:DUFN), is not the largest company out there, but it saw significant share price movement during recent months on the SWX, rising to highs of CHF68.24 and falling to the lows of CHF54.22. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Dufry's current trading price of CHF56.44 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Dufry’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Dufry

Is Dufry still cheap?

According to my valuation model, Dufry seems to be fairly priced at around 14.56% above my intrinsic value, which means if you buy Dufry today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CHF49.27, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Dufry’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Dufry?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Dufry's earnings over the next few years are expected to increase by 92%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? DUFN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on DUFN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Dufry at this point in time. When we did our research, we found 2 warning signs for Dufry (1 is a bit unpleasant!) that we believe deserve your full attention.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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