At €26.80, Is HELMA Eigenheimbau Aktiengesellschaft (ETR:H5E) Worth Looking At Closely?

HELMA Eigenheimbau Aktiengesellschaft (ETR:H5E), is not the largest company out there, but it saw significant share price movement during recent months on the XTRA, rising to highs of €41.30 and falling to the lows of €26.80. 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 HELMA Eigenheimbau's current trading price of €26.80 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 HELMA Eigenheimbau’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for HELMA Eigenheimbau

What Is HELMA Eigenheimbau 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 5.64x is currently trading slightly below its industry peers’ ratio of 6.83x, which means if you buy HELMA Eigenheimbau today, you’d be paying a decent price for it. And if you believe that HELMA Eigenheimbau should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like HELMA Eigenheimbau’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of HELMA Eigenheimbau look like?

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. With profit expected to grow by 31% over the next couple of years, the future seems bright for HELMA Eigenheimbau. 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? It seems like the market has already priced in H5E’s positive outlook, with shares trading around industry price multiples. 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 H5E? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on H5E, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for H5E, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing HELMA Eigenheimbau at this point in time. At Simply Wall St, we found 1 warning sign for HELMA Eigenheimbau and we think they deserve your attention.

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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.