At €105, Is It Time To Put Amadeus FiRe AG (ETR:AAD) On Your Watch List?

While Amadeus FiRe AG (ETR:AAD) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the XTRA, rising to highs of €113 and falling to the lows of €102. 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 Amadeus FiRe's current trading price of €105 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Amadeus FiRe’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 Amadeus FiRe

What Is Amadeus FiRe Worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.43x is currently trading in-line with its industry peers’ ratio, which means if you buy Amadeus FiRe today, you’d be paying a relatively sensible price for it. So, is there another chance to buy low in the future? Given that Amadeus FiRe’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 does the future of Amadeus FiRe look like?

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. Amadeus FiRe's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? AAD’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 AAD? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on AAD, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for AAD, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Amadeus FiRe, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Amadeus FiRe you should be aware of.

If you are no longer interested in Amadeus FiRe, 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.