Should You Think About Buying Knorr-Bremse AG (ETR:KBX) Now?

Knorr-Bremse AG (ETR:KBX) received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €66.78 at one point, and dropping to the lows of €57.04. 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 Knorr-Bremse's current trading price of €60.46 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 Knorr-Bremse’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Knorr-Bremse

What Is Knorr-Bremse Worth?

According to my valuation model, Knorr-Bremse seems to be fairly priced at around 7.9% below my intrinsic value, which means if you buy Knorr-Bremse today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €65.62, then there’s not much of an upside to gain from mispricing. In addition to this, Knorr-Bremse has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Knorr-Bremse?

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. 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. Knorr-Bremse's earnings over the next few years are expected to increase by 43%, 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? KBX’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 KBX, now may not be the most optimal 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

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 example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Knorr-Bremse.

If you are no longer interested in Knorr-Bremse, 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.