What Is MTU Aero Engines AG's (ETR:MTX) Share Price Doing?

By
Simply Wall St
Published
November 05, 2021
XTRA:MTX
Source: Shutterstock

Let's talk about the popular MTU Aero Engines AG (ETR:MTX). The company's shares saw a decent share price growth in the teens level on the XTRA over the last few months. 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, could the stock still be trading at a relatively cheap price? Let’s examine MTU Aero Engines’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for MTU Aero Engines

Is MTU Aero Engines still cheap?

Great news for investors – MTU Aero Engines is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €292.85, but it is currently trading at €203 on the share market, meaning that there is still an opportunity to buy now. However, given that MTU Aero Engines’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 MTU Aero Engines look like?

earnings-and-revenue-growth
XTRA:MTX Earnings and Revenue Growth November 6th 2021

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. With profit expected to more than double over the next couple of years, the future seems bright for MTU Aero Engines. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since MTX is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MTX for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MTX. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing MTU Aero Engines at this point in time. Every company has risks, and we've spotted 3 warning signs for MTU Aero Engines you should know about.

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

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.