At €109, Is It Time To Put Wacker Chemie AG (ETR:WCH) On Your Watch List?

While Wacker Chemie AG (ETR:WCH) might not have the largest market cap around , it saw a decent share price growth of 18% on the XTRA over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Wacker Chemie’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Wacker Chemie

What's The Opportunity In Wacker Chemie?

According to our 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. We’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 17.22x is currently trading slightly above its industry peers’ ratio of 15.88x, which means if you buy Wacker Chemie today, you’d be paying a relatively reasonable price for it. And if you believe that Wacker Chemie should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Wacker Chemie’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Wacker Chemie look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 grow by 65% over the next couple of years, the future seems bright for Wacker Chemie. 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? WCH’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at WCH? 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 an eye on WCH, 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 WCH, 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 Wacker Chemie, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Wacker Chemie, and understanding these should be part of your investment process.

If you are no longer interested in Wacker Chemie, 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.