At €6.53, Is It Time To Put SGL Carbon SE (ETR:SGL) On Your Watch List?

SGL Carbon SE (ETR:SGL), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the 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? Let’s examine SGL Carbon’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for SGL Carbon

What's The Opportunity In SGL Carbon?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 8.84% above our intrinsic value, which means if you buy SGL Carbon today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth €6.00, 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 SGL Carbon’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 Returns Can We Expect From SGL Carbon In The Future?

What kind of returns can we expect from SGL Carbon in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. A way to assess stock quality is by looking how much it returns to you as the investor compared to how much you’re invested. SGL Carbon is expected to return 13% of your investment in the next couple of years if you buy the stock today. This is a relatively good return on your investment which builds up the case for owning the stock.

What This Means For You

Are you a shareholder? SGL’s optimistic future return 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 financial strength of the company. Have these factors changed since the last time you looked at the stock? And 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 SGL for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for SGL, which means it’s worth diving deeper into other factors such as the track record of its management team, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for SGL Carbon you should be aware of.

If you are no longer interested in SGL Carbon, 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.