3 German Stocks Estimated To Be Trading Below Intrinsic Value By Up To 49.7%

October 10, 2024

As tensions in the Middle East escalate, European markets have experienced increased caution, with Germany's DAX index recently declining by 1.81%. Amidst these uncertainties and potential interest rate adjustments by the European Central Bank, investors are keenly searching for opportunities that may be trading below their intrinsic value. Identifying undervalued stocks can offer a strategic advantage in such volatile times, as these equities might provide growth potential when market conditions stabilize.

Top 10 Undervalued Stocks Based On Cash Flows In Germany

Name	Current Price	Fair Value (Est)	Discount (Est)
technotrans (XTRA:TTR1)	€17.60	€31.22	43.6%
init innovation in traffic systems (XTRA:IXX)	€35.10	€52.10	32.6%
Formycon (XTRA:FYB)	€51.20	€81.68	37.3%
Gerresheimer (XTRA:GXI)	€80.95	€112.58	28.1%
Zalando (XTRA:ZAL)	€29.65	€58.98	49.7%
Schweizer Electronic (XTRA:SCE)	€3.84	€7.19	46.6%
Your Family Entertainment (DB:RTV)	€2.38	€4.35	45.3%
LPKF Laser & Electronics (XTRA:LPK)	€8.99	€12.44	27.7%
MTU Aero Engines (XTRA:MTX)	€286.00	€567.31	49.6%
Basler (XTRA:BSL)	€9.10	€12.73	28.5%

Click here to see the full list of 19 stocks from our Undervalued German Stocks Based On Cash Flows screener.

We're going to check out a few of the best picks from our screener tool.

SAP (XTRA:SAP)

Overview: SAP SE, along with its subsidiaries, offers applications, technology, and services globally and has a market cap of approximately €241.81 billion.

Operations: The company's revenue is primarily derived from its Applications, Technology & Services segment, which generated €32.54 billion.

Estimated Discount To Fair Value: 24.5%

SAP is trading significantly below its estimated fair value, presenting a potential opportunity for investors focused on cash flows. The company forecasts robust earnings growth of 37.9% annually, outpacing the German market. Recent AI innovations, including enhancements to their generative AI copilot Joule and new collaborative AI agents, signal SAP's commitment to leveraging technology for business transformation. However, large one-off items have impacted financial results, which investors should consider when evaluating the stock's valuation based on cash flows.

XTRA:SAP Discounted Cash Flow as at Oct 2024

Verbio (XTRA:VBK)

Overview: Verbio SE is involved in the production and distribution of fuels and finished products across Germany, Europe, North America, and internationally, with a market cap of approximately €1.10 billion.

Operations: The company's revenue is primarily derived from its Biodiesel segment, which generated €989.66 million, and its Bioethanol (including Biomethane) segment, which brought in €661.38 million.

Estimated Discount To Fair Value: 16.5%

Verbio's current share price is below its estimated fair value of €20.77, suggesting potential for cash flow-focused investors. Despite a volatile share price and declining profit margins, Verbio's earnings are projected to grow significantly at 34.2% annually, surpassing the German market average. Recent financial results show decreased sales of €1.67 billion and net income of €19.96 million, reflecting challenges that need consideration when assessing its valuation based on cash flows.

XTRA:VBK Discounted Cash Flow as at Oct 2024

Zalando (XTRA:ZAL)

Overview: Zalando SE operates an online platform for fashion and lifestyle products, with a market cap of approximately €7.61 billion.

Operations: The company generates revenue primarily through its online platform for fashion and lifestyle products, with segment adjustments amounting to €10.49 billion.

Estimated Discount To Fair Value: 49.7%

Zalando's stock is trading at €29.65, significantly below its estimated fair value of €58.98, presenting a potential opportunity for cash flow-focused investors. The company reported strong financial performance with net income rising to €95.7 million in Q2 2024 from €56.6 million the previous year, and earnings per share increasing accordingly. Despite low forecasted return on equity, expected annual earnings growth of 24.8% surpasses the German market average, highlighting robust profit prospects amidst executive changes.

XTRA:ZAL Discounted Cash Flow as at Oct 2024

Key Takeaways

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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.

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