Assessing BASF (XTRA:BAS) Valuation As Recent Returns Send Mixed Signals

Recent performance snapshot for BASF

BASF (XTRA:BAS) has been flat over the past day, with a 3.5% decline over the past week, a 6% gain over the past month, and roughly 9.5% over the past 3 months.

Over longer periods, the stock shows a 9.1% gain year to date and a 5.6% total return over the past year, alongside a 22.5% total return over 3 years and a 5% total return decline over 5 years.

See our latest analysis for BASF.

At a share price of €48.87, BASF has paired a 6% 30 day share price return with a 9.1% year to date gain. The 3 year total shareholder return of 22.5% contrasts with a 5 year total shareholder return decline of 5%, which suggests earlier weakness has been followed by improving momentum recently.

If BASF’s recent upswing has you thinking about where else capital could work, this is a good moment to scan 24 power grid technology and infrastructure stocks as another way to uncover ideas tied to large scale infrastructure spending.

With BASF trading at €48.87, only around 2% below the average analyst price target yet sitting on an implied intrinsic discount close to 50%, the key question is simple: is there genuine upside here or is the market already pricing in future growth?

Most Popular Narrative: 1% Overvalued

With BASF last closing at €48.87 against a narrative fair value of €48.50, the current price sits almost on top of that long term model, which leans heavily on cash flow and margin assumptions.

The Discount Rate edged up from 6.30% to 6.44%, implying slightly more caution in the risk assumptions applied to future cash flows.

Revenue Growth was adjusted from 34.31% to 37.87%, reflecting a modestly higher growth profile in the long term modelling.

Read the complete narrative.

Curious how a slightly higher risk hurdle still supports this fair value? The narrative leans on a particular blend of revenue expansion, margin repair and future earnings multiples that are anything but casual assumptions.

Result: Fair Value of €48.50 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there is still real execution risk around portfolio moves such as the Coatings exit and Agricultural Solutions IPO, and prolonged weak margins in European chemicals could unsettle that fair value story.

Find out about the key risks to this BASF narrative.

Another View: Cash Flows Point the Other Way

While the narrative model suggests BASF is roughly 1% overvalued at €48.87 versus a €48.50 fair value, our DCF model paints a different picture with a fair value estimate of €96.67. That implies the current price is trading at a very large discount to modelled future cash flows. The key question for investors is which signal to place more weight on: the earnings story or the cash flow math.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out BASF for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 231 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed messages on value and risk here, so if this has you on the fence, take a moment to check the full picture for yourself and weigh up 2 key rewards and 3 important warning signs.

Looking for more investment ideas?

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• Secure more dependable cash flows by scanning companies in our 441 dividend fortresses that are built around consistent income 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.

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