Today we’re going to take a look at the well-established thyssenkrupp AG (XTRA:TKA). The company’s stock saw significant share price volatility over the past couple of months on the XTRA, rising to the highs of €24.64 and falling to the lows of €20.93. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether thyssenkrupp’s current trading price of €21.6 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 thyssenkrupp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for thyssenkrupp
Is thyssenkrupp still cheap?According to my valuation model, the stock is currently overvalued by about 91%, trading at €21.60 compared to my intrinsic value of €11.28. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that thyssenkrupp’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 thyssenkrupp?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. With profit expected to more than double over the next couple of years, the future seems bright for thyssenkrupp. It looks like higher cash flows 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 well and truly priced in TKA’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TKA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on TKA for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for TKA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on thyssenkrupp. You can find everything you need to know about thyssenkrupp in the latest infographic research report. If you are no longer interested in thyssenkrupp, you can use our free platform to see my list of over 50 other stocks with a high growth potential.