Is It Too Late To Consider Salzgitter After Its 158% Share Price Surge?

• If you are wondering whether Salzgitter is still a smart buy after its big run up, or if the value has already been priced in, this article will help you unpack that question in plain language.
• The stock has been on a tear, up 36.9% over the last month and 158.2% over the past year, even after a small 1.4% pullback in the last week.
• Recent moves have been shaped by a mix of themes in the steel and materials space, including renewed interest in European industrials and ongoing attention on how steelmakers fit into the energy transition story. Together, these factors have influenced how investors think about both the growth potential and the risk profile for companies like Salzgitter.
• Right now, Salzgitter scores a 3 out of 6 on our valuation checks. This suggests pockets of undervaluation, but not a standout bargain across the board. We will walk through different valuation approaches before finishing with a more intuitive way to judge whether the current price really makes sense.

Salzgitter delivered 158.2% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: Salzgitter Dividend Discount Model (DDM) Analysis

The Dividend Discount Model estimates what a share should be worth by projecting all future dividends a company is expected to pay, then discounting those payments back to today.

For Salzgitter, the model uses an annual dividend per share of about €0.30 and a very high reported return on equity of 160.5%. With a payout ratio of roughly 383%, the firm is currently paying out far more than it earns. As a result, the implied long term dividend growth is modest at about 1.5% a year. This framework assumes dividends remain sustainable and grow slowly over time, rather than continuing at today’s aggressive payout level indefinitely.

Using these inputs, the DDM produces an intrinsic value of roughly €6.12 per share. Compared with the current market price, this implies the stock is about 560.3% overvalued, suggesting investors are paying far more for Salzgitter’s shares than its dividend profile alone can justify.

Result: OVERVALUED

Our Dividend Discount Model (DDM) analysis suggests Salzgitter may be overvalued by 560.3%. Discover 917 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Salzgitter.

Approach 2: Salzgitter Price vs Sales

For companies like Salzgitter that operate in cyclical, capital intensive industries, the price to sales ratio is a useful way to cut through earnings volatility and focus on how the market values each euro of revenue. In general, higher growth and lower risk can justify a richer multiple, while slower growth or greater uncertainty usually call for a more conservative price to sales ratio.

Salzgitter currently trades on a price to sales ratio of about 0.24x, which is below both the broader Metals and Mining industry average of roughly 1.87x and the immediate peer group average of about 0.33x. Simply Wall St’s Fair Ratio metric suggests a price to sales ratio of around 0.61x would be appropriate for Salzgitter, given its specific mix of growth prospects, margins, risk profile, industry position and market cap. This Fair Ratio is more informative than a straight peer or industry comparison because it tailors expectations to the company’s fundamentals rather than assuming it should trade like the average steel producer.

Comparing the Fair Ratio of 0.61x with the current 0.24x multiple indicates that Salzgitter appears meaningfully undervalued on a sales basis.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1462 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Salzgitter Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a simple tool on Simply Wall St's Community page that lets you write the story behind your numbers by linking your view of a company’s future revenue, earnings and margins to a financial forecast and, ultimately, a fair value estimate.

Instead of just accepting a single target price, a Narrative helps you spell out why you think Salzgitter’s earnings, regulations and steel demand will evolve in a certain way. It turns that story into explicit forecasts, and then compares the resulting Fair Value with today’s share price so you can quickly see whether it looks like a buy, hold, or sell.

Because Narratives on Simply Wall St are updated as new information arrives, like earnings, news or guidance changes, your fair value view adjusts dynamically rather than going stale. You can see, for example, how one investor’s optimistic Narrative might point to upside closer to €45 while another’s more cautious view anchors fair value around €15.50, all within the same, easy to use framework.

Do you think there's more to the story for Salzgitter? Head over to our Community to see what others are saying!

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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