When Should You Buy HORNBACH Holding AG & Co. KGaA (ETR:HBH)?

While HORNBACH Holding AG & Co. KGaA (ETR:HBH) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €86.50 at one point, and dropping to the lows of €71.10. 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 HORNBACH Holding KGaA's current trading price of €77.20 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at HORNBACH Holding KGaA’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 HORNBACH Holding KGaA

What's The Opportunity In HORNBACH Holding KGaA?

Good news, investors! HORNBACH Holding KGaA is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that HORNBACH Holding KGaA’s ratio of 7.67x is below its peer average of 17.61x, which indicates the stock is trading at a lower price compared to the Specialty Retail industry. What’s more interesting is that, HORNBACH Holding KGaA’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will HORNBACH Holding KGaA 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. However, with a negative profit growth of -4.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for HORNBACH Holding KGaA. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although HBH is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to HBH, 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 HBH for a while, but hesitant on making the leap, we recommend you dig deeper 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.

Diving deeper into the forecasts for HORNBACH Holding KGaA mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.

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.