At €72.85, Is Gerresheimer AG (ETR:GXI) Worth Looking At Closely?

By
Simply Wall St
Published
February 18, 2022
XTRA:GXI
Source: Shutterstock

While Gerresheimer AG (ETR:GXI) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the XTRA, rising to highs of €84.95 and falling to the lows of €72.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Gerresheimer's current trading price of €72.85 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Gerresheimer’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Gerresheimer

What is Gerresheimer worth?

Great news for investors – Gerresheimer is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’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 26.45x is currently well-below the industry average of 33.45x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Gerresheimer’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Gerresheimer look like?

earnings-and-revenue-growth
XTRA:GXI 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. With profit expected to more than double over the next couple of years, the future seems bright for Gerresheimer. 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? Since GXI is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on GXI for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GXI. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Gerresheimer, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Gerresheimer.

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

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