Is Now The Time To Look At Buying Daimler AG (ETR:DAI)?

Let's talk about the popular Daimler AG (ETR:DAI). The company's shares saw significant share price movement during recent months on the XTRA, rising to highs of €80.14 and falling to the lows of €69.62. 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 Daimler's current trading price of €70.70 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 Daimler’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 Daimler

Is Daimler still cheap?

Great news for investors – Daimler is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €95.32, but it is currently trading at €70.70 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Daimler’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Daimler 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. However, with a negative profit growth of -5.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Daimler. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although DAI 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 DAI, 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 an eye on DAI for a while, but hesitant on making the leap, I recommend you dig deeper 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. To help with this, we've discovered 3 warning signs (2 are a bit concerning!) that you ought to be aware of before buying any shares in Daimler.

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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.
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