Should You Think About Buying Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) Now?

Let's talk about the popular Bayerische Motoren Werke Aktiengesellschaft ( ETR:BMW ). The company's shares received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €113 at one point, and dropping to the lows of €99.41. 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 Bayerische Motoren Werke's current trading price of €107 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bayerische Motoren Werke’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Bayerische Motoren Werke

Is Bayerische Motoren Werke Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.99% above my intrinsic value, which means if you buy Bayerische Motoren Werke today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €91.25, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Bayerische Motoren Werke’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Bayerische Motoren Werke generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Bayerische Motoren Werke, it is expected to deliver a negative earnings growth of -6.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? BMW seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on BMW for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on BMW should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 4 warning signs for Bayerische Motoren Werke (1 shouldn't be ignored) you should be familiar with.

If you are no longer interested in Bayerische Motoren Werke, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.