Is Now An Opportune Moment To Examine secunet Security Networks Aktiengesellschaft (ETR:YSN)?

While secunet Security Networks Aktiengesellschaft (ETR:YSN) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the XTRA, rising to highs of €465 and falling to the lows of €283. 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 secunet Security Networks' current trading price of €283 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 secunet Security Networks’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for secunet Security Networks

What is secunet Security Networks worth?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that secunet Security Networks’s ratio of 42.41x is above its peer average of 24.51x, which suggests the stock is trading at a higher price compared to the IT industry. Another thing to keep in mind is that secunet Security Networks’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

Can we expect growth from secunet Security Networks?

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. 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. secunet Security Networks' earnings over the next few years are expected to increase by 49%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in YSN’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe YSN should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on YSN for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for YSN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about secunet Security Networks as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with secunet Security Networks, and understanding it should be part of your investment process.

If you are no longer interested in secunet Security Networks, 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.