Stock Analysis

Is Now The Time To Look At Buying Bilfinger SE (ETR:GBF)?

XTRA:GBF
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Bilfinger SE (ETR:GBF), might not be a large cap stock, but it saw a decent share price growth in the teens level on the XTRA over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Bilfinger’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Bilfinger

What's the opportunity in Bilfinger?

Good news, investors! Bilfinger is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Bilfinger’s ratio of 10.74x is below its peer average of 16.35x, which indicates the stock is trading at a lower price compared to the Commercial Services industry. Although, there may be another chance to buy again in the future. This is because Bilfinger’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 does the future of Bilfinger look like?

earnings-and-revenue-growth
XTRA:GBF Earnings and Revenue Growth March 2nd 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a negative profit growth of -14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Bilfinger. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although GBF is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to GBF, 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 tabs on GBF for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Bilfinger as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Bilfinger (of which 1 is concerning!) you should know about.

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

Valuation is complex, but we're helping make it simple.

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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.