Should You Think About Buying Vonovia SE (ETR:VNA) Now?

Let's talk about the popular Vonovia SE (ETR:VNA). The company's shares led the XTRA gainers with a relatively large price hike in the past couple of weeks. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the large-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 examine Vonovia’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Vonovia

Is Vonovia Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 6.5% below our intrinsic value, which means if you buy Vonovia today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €35.73, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Vonovia’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Vonovia?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extreme expected decline in the top-line over the next couple of years, near-term growth is certainly not a driver of a buy decision. Even with a larger decline in expenses, it seems like high uncertainty is on the cards for Vonovia.

What This Means For You

Are you a shareholder? Currently, VNA appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on VNA for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on VNA should the price fluctuate below its true value.

If you want to dive deeper into Vonovia, you'd also look into what risks it is currently facing. Our analysis shows 2 warning signs for Vonovia (1 is potentially serious!) and we strongly recommend you look at these before investing.

If you are no longer interested in Vonovia, 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.