When Should You Buy HeidelbergCement AG (ETR:HEI)?

HeidelbergCement AG (ETR:HEI) received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €66.66 at one point, and dropping to the lows of €57.52. 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 HeidelbergCement's current trading price of €62.26 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at HeidelbergCement’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for HeidelbergCement

Is HeidelbergCement still cheap?

Good news, investors! HeidelbergCement is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 6.7x is currently well-below the industry average of 16.42x, meaning that it is trading at a cheaper price relative to its peers. However, given that HeidelbergCement’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from HeidelbergCement?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a relatively muted profit growth of 1.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for HeidelbergCement, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since HEI is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on HEI for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy HEI. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

If you want to dive deeper into HeidelbergCement, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with HeidelbergCement, and understanding them should be part of your investment process.

If you are no longer interested in HeidelbergCement, 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.