Exploring Undervalued German Exchange Stocks With Intrinsic Discounts Ranging From 35% to 49.6%

Amid a backdrop of mixed performances across major European markets, Germany's DAX index has shown resilience with a modest rise. This context sets the stage for evaluating potential opportunities in undervalued stocks on the German exchange, where intrinsic discounts suggest hidden value in an otherwise cautious market environment.

Top 10 Undervalued Stocks Based On Cash Flows In Germany

Name	Current Price	Fair Value (Est)	Discount (Est)
Kontron (XTRA:SANT)	€19.14	€32.79	41.6%
Novem Group (XTRA:NVM)	€5.46	€10.20	46.5%
PSI Software (XTRA:PSAN)	€22.00	€43.65	49.6%
Stratec (XTRA:SBS)	€45.85	€81.28	43.6%
MTU Aero Engines (XTRA:MTX)	€236.60	€419.40	43.6%
CHAPTERS Group (XTRA:CHG)	€23.60	€46.77	49.5%
SBF (DB:CY1K)	€3.46	€5.75	39.8%
Dr. Hönle (XTRA:HNL)	€17.00	€33.96	49.9%
Your Family Entertainment (DB:RTV)	€2.40	€4.52	46.9%
Redcare Pharmacy (XTRA:RDC)	€111.00	€208.66	46.8%

Click here to see the full list of 29 stocks from our Undervalued German Stocks Based On Cash Flows screener.

Underneath we present a selection of stocks filtered out by our screen

MTU Aero Engines (XTRA:MTX)

Overview: MTU Aero Engines AG operates in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines and industrial gas turbines globally, with a market capitalization of approximately €12.73 billion.

Operations: MTU Aero Engines generates revenue through two primary segments: Commercial Maintenance Business (MRO), which brought in €4.35 billion, and the Commercial and Military Engine Business (OEM) with €1.27 billion in earnings.

Estimated Discount To Fair Value: 43.6%

MTU Aero Engines, valued at €236.6, is trading significantly under its fair value of €419.4, indicating a potential undervaluation based on cash flows. Despite a recent dip in net income from €134 million to €126 million in Q1 2024, the company's revenue growth outpaces the German market at 12.2% annually compared to 5.2%. With earnings expected to grow by 35.5% per year and profitability forecast within three years, MTU presents an intriguing case for those looking at cash flow-based valuations in Germany’s aerospace sector.

• The analysis detailed in our MTU Aero Engines growth report hints at robust future financial performance.
• Dive into the specifics of MTU Aero Engines here with our thorough financial health report.

PSI Software (XTRA:PSAN)

Overview: PSI Software SE specializes in developing and integrating software solutions to optimize the flow of energy and materials for utilities and industries globally, with a market capitalization of approximately €340.74 million.

Operations: The company's revenue is primarily generated from two segments: Energy Management (€141.78 million) and Production Management (€148.79 million).

Estimated Discount To Fair Value: 49.6%

PSI Software, trading at €22, is significantly undervalued by over 20% against a fair value estimate of €43.65, based on discounted cash flows. Recent strategic appointments and focus on cloud transformation underscore its commitment to technological advancements. Despite a substantial drop in net income from EUR 9.69 million to EUR 0.324 million in the previous year and a dividend coverage issue, PSI is expected to return to profitability with an above-market annual profit growth forecast over the next three years and revenue growth projected at 7.6% annually.

• Upon reviewing our latest growth report, PSI Software's projected financial performance appears quite optimistic.
• Delve into the full analysis health report here for a deeper understanding of PSI Software.

SAP (XTRA:SAP)

Overview: SAP SE, along with its subsidiaries, operates globally offering applications, technology, and services with a market capitalization of approximately €215.18 billion.

Operations: The company generates €31.81 billion from its Applications, Technology & Services segment.

Estimated Discount To Fair Value: 35%

SAP SE, priced at €185.68, appears undervalued by over 20% compared to a fair value of €285.8, reflecting potential based on discounted cash flows. Despite recent strategic alliances enhancing its complex manufacturing solutions and expansions in AI-driven cloud ERP with AWS, SAP faces challenges from a substantial net loss reported in Q1 2024 (€828 million). Nonetheless, with expected significant annual earnings growth and revenue growth forecasts outpacing the German market average, SAP presents an intriguing case for undervalued stock based on future cash flow potentials.

• According our earnings growth report, there's an indication that SAP might be ready to expand.
• Navigate through the intricacies of SAP with our comprehensive financial health report here.

Turning Ideas Into Actions

• Access the full spectrum of 29 Undervalued German Stocks Based On Cash Flows by clicking on this link.
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Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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.

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