At €24.62, Is It Time To Put 1&1 Drillisch AG (ETR:DRI) On Your Watch List?

1&1 Drillisch AG (ETR:DRI), might not be a large cap stock, but it led the XTRA gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on 1&1 Drillisch’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for 1&1 Drillisch

What's the opportunity in 1&1 Drillisch?

Good news, investors! 1&1 Drillisch is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €37.26, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, 1&1 Drillisch’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from 1&1 Drillisch?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for 1&1 Drillisch, at least in the near future.

What this means for you:

Are you a shareholder? Although DRI is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to DRI, 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 DRI for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 1 warning sign for 1&1 Drillisch you should know about.

If you are no longer interested in 1&1 Drillisch, 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. 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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