Stock Analysis

What Does RTL Group S.A.'s (ETR:RRTL) Share Price Indicate?

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XTRA:RRTL
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RTL Group S.A. (ETR:RRTL), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. 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, could the stock still be trading at a relatively cheap price? Let’s examine RTL Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for RTL Group

What's the opportunity in RTL Group?

Good news, investors! RTL Group 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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that RTL Group’s ratio of 6.27x is below its peer average of 21.67x, which indicates the stock is trading at a lower price compared to the Media industry. RTL Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from RTL Group?

earnings-and-revenue-growth
XTRA:RRTL Earnings and Revenue Growth February 18th 2022

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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for RTL Group, at least in the near future.

What this means for you:

Are you a shareholder? Although RRTL is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to RRTL, 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 an eye on RRTL for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Be aware that RTL Group is showing 3 warning signs in our investment analysis and 1 of those can't be ignored...

If you are no longer interested in RTL Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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About XTRA:RRTL

RTL Group

RTL Group S.A., an entertainment company, operates television (TV) channels and radio stations, and provides streaming services in Germany, France, the Netherlands, Belgium, the United Kingdom, the United States, and internationally.

Flawless balance sheet, undervalued and pays a dividend.