Is Now The Time To Look At Buying M1 Kliniken AG (ETR:M12)?

While M1 Kliniken AG (ETR:M12) might not be the most widely known stock at the moment, it led the XTRA gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine M1 Kliniken’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Our analysis indicates that M12 is potentially undervalued!

What Is M1 Kliniken 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. 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 M1 Kliniken’s ratio of 12.41x is trading slightly above its industry peers’ ratio of 11.67x, which means if you buy M1 Kliniken today, you’d be paying a relatively sensible price for it. And if you believe that M1 Kliniken should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, M1 Kliniken’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.

What does the future of M1 Kliniken 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 30% over the next couple of years, the future seems bright for M1 Kliniken. 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 M12’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 M12? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on M12, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for M12, 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.

If you want to dive deeper into M1 Kliniken, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for M1 Kliniken you should be aware of.

If you are no longer interested in M1 Kliniken, 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.