Is There Now An Opportunity In Eckert & Ziegler Strahlen- und Medizintechnik AG (ETR:EUZ)?

Eckert & Ziegler Strahlen- und Medizintechnik AG (ETR:EUZ), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €63.50 at one point, and dropping to the lows of €38.02. 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 Eckert & Ziegler Strahlen- und Medizintechnik's current trading price of €38.02 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 Eckert & Ziegler Strahlen- und Medizintechnik’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 Eckert & Ziegler Strahlen- und Medizintechnik

What's the opportunity in Eckert & Ziegler Strahlen- und Medizintechnik?

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. 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 Eckert & Ziegler Strahlen- und Medizintechnik’s ratio of 28.88x is trading slightly below its industry peers’ ratio of 30.55x, which means if you buy Eckert & Ziegler Strahlen- und Medizintechnik today, you’d be paying a decent price for it. And if you believe Eckert & Ziegler Strahlen- und Medizintechnik should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, Eckert & Ziegler Strahlen- und Medizintechnik’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Eckert & Ziegler Strahlen- und Medizintechnik?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 21% over the next couple of years, the future seems bright for Eckert & Ziegler Strahlen- und Medizintechnik. 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 EUZ’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 EUZ? 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 tabs on EUZ, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for EUZ, 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Eckert & Ziegler Strahlen- und Medizintechnik has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you are no longer interested in Eckert & Ziegler Strahlen- und Medizintechnik, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.