Is Wacker Chemie AG (ETR:WCH) Potentially Undervalued?

Wacker Chemie AG (ETR:WCH), is not the largest company out there, but it saw a decent share price growth in the teens level on the XTRA over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Wacker Chemie’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Wacker Chemie

What's The Opportunity In Wacker Chemie?

Good news, investors! Wacker Chemie is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €154.88, but it is currently trading at €116 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Wacker Chemie’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Wacker Chemie generate?

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. Though in the case of Wacker Chemie, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Although WCH is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to WCH, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on WCH for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Wacker Chemie as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Wacker Chemie (including 1 which shouldn't be ignored).

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.