Should You Investigate Bilfinger SE (ETR:GBF) At €44.75?

While Bilfinger SE (ETR:GBF) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €51.00 at one point, and dropping to the lows of €42.70. 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 Bilfinger's current trading price of €44.75 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 Bilfinger’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Bilfinger

What's The Opportunity In Bilfinger?

Great news for investors – Bilfinger is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 7.27x is currently well-below the industry average of 13.02x, meaning that it is trading at a cheaper price relative to its peers. However, given that Bilfinger’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 kind of growth will Bilfinger generate?

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. However, with a negative profit growth of -9.3% 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. Consider 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, we 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Bilfinger and you'll want to know about it.

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.

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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.