Why Deutsche Post AG (ETR:DHL) Could Be Worth Watching

Let's talk about the popular Deutsche Post AG (ETR:DHL). The company's shares received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €40.22 at one point, and dropping to the lows of €34.39. 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 Deutsche Post's current trading price of €35.59 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Deutsche Post’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Deutsche Post

What's The Opportunity In Deutsche Post?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Deutsche Post’s ratio of 12.81x is trading slightly below its industry peers’ ratio of 13.32x, which means if you buy Deutsche Post today, you’d be paying a reasonable price for it. And if you believe that Deutsche Post should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Although, there may be an opportunity to buy in the future. This is because Deutsche Post’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Deutsche Post?

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. Deutsche Post's earnings over the next few years are expected to increase by 33%, 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? DHL’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at DHL? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on DHL, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for DHL, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Deutsche Post as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Deutsche Post has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in Deutsche Post, 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.