When Should You Buy Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)?

Let's talk about the popular Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Bayerische Motoren Werke’s outlook and valuation to see if the opportunity still exists.

Check out the opportunities and risks within the DE Auto industry.

Is Bayerische Motoren Werke Still Cheap?

Good news, investors! Bayerische Motoren Werke is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €114.12, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, 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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Bayerische Motoren Werke look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Bayerische Motoren Werke, at least in the near future.

What This Means For You

Are you a shareholder? Although BMW is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to BMW, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on BMW for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 4 warning signs for Bayerische Motoren Werke (2 don't sit too well with us!) that we believe deserve your full attention.

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.