Kontron (XTRA:SANT): Evaluating Valuation as NVIDIA-Powered VPX Partnership Strengthens Growth Prospects

Kontron (XTRA:SANT) has unveiled a strategic partnership with EIZO Rugged Solutions, incorporating NVIDIA-powered GPU technology into its VPX systems. This collaboration is designed to support demanding missions that require advanced computing and graphics capabilities.

See our latest analysis for Kontron.

Kontron's momentum is drawing attention, especially after this latest partnership with EIZO Rugged Solutions. Although the share price has come down 12% over the past 90 days, the year-to-date price return remains a solid 25%, and the total return over the last 12 months sits at an impressive 56%, outpacing many technology peers as investor confidence shows resilience amidst short-term volatility.

If you’re interested in uncovering more emerging tech leaders with strong growth signals, it’s a great time to check out See the full list for free.

With such robust returns and a discount to analyst price targets still in place, investors must ask whether Kontron remains undervalued or whether the current price already reflects its future growth prospects.

Price-to-Earnings of 11.1x: Is it justified?

Kontron’s shares are trading at a price-to-earnings (P/E) ratio of 11.1x, which is well below its technology industry peers and market averages. This suggests that the market could be undervaluing its profit potential.

The price-to-earnings ratio measures how much investors are willing to pay per euro of annual earnings. For a tech company like Kontron, this multiple can reflect sentiment about future growth, profitability, and the quality of earnings compared to similar businesses.

On a comparative basis, Kontron’s P/E appears attractive. It sits at just 11.1x, while the European IT industry average is 19.2x and the average among its direct peers is even higher at 35.1x. The stock also trades at a substantial discount to its estimated fair P/E ratio of 20x, which could signal the potential for repricing if current growth trends continue and confidence builds in next year’s results.

Explore the SWS fair ratio for Kontron

Result: Price-to-Earnings of 11.1x (UNDERVALUED)

However, global tech demand shifts and slower net income growth could challenge Kontron’s momentum, potentially impacting future valuation upside for investors.

Find out about the key risks to this Kontron narrative.

Another View: Discounted Cash Flow Perspective

While the market currently prices Kontron at a significant discount to its industry and peers, our DCF model also points to undervaluation. The SWS DCF model estimates fair value at €31.82, which is over 21% higher than today’s share price. Does the DCF calculation provide an extra margin of safety for investors, or could the market have more concerns that are not captured by the model?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kontron for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Kontron Narrative

If you want to form your own perspective or challenge these insights, you can analyze the figures and build a narrative in just a few minutes with Do it your way

A great starting point for your Kontron research is our analysis highlighting 5 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Unlock more opportunities by checking out handpicked stocks that fit unique strategies. Don’t miss the chance to spot tomorrow’s leaders and strengthen your portfolio now.

• Boost your income by tracking companies with strong, sustainable yields using these 18 dividend stocks with yields > 3%, which highlights reliable dividend performers.
• Embrace the future and stay ahead of disruptive trends with access to these 24 AI penny stocks, featuring pioneers in artificial intelligence innovation.
• Find undervalued gems with hidden growth potential and sharpen your edge by investigating these 878 undervalued stocks based on cash flows, designed for attractive valuation picks.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com