Is It Time To Consider Buying HORNBACH Holding AG & Co. KGaA (ETR:HBH)?

HORNBACH Holding AG & Co. KGaA (ETR:HBH), is not the largest company out there, but it received a lot of attention from a substantial price increase 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 stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on HORNBACH Holding KGaA’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for HORNBACH Holding KGaA

What's The Opportunity In HORNBACH Holding KGaA?

According to our valuation model, HORNBACH Holding KGaA seems to be fairly priced at around 1.1% below our intrinsic value, which means if you buy HORNBACH Holding KGaA today, you’d be paying a fair price for it. And if you believe the company’s true value is €68.55, 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 HORNBACH Holding KGaA’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.

What does the future of HORNBACH Holding KGaA 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. Though in the case of HORNBACH Holding KGaA, 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? Currently, HBH 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 optimal 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 HBH for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems 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 gel your views on HBH should the price fluctuate below its true value.

If you'd like to know more about HORNBACH Holding KGaA as a business, it's important to be aware of any risks it's facing. For example, HORNBACH Holding KGaA has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

If you are no longer interested in HORNBACH Holding KGaA, 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.