Is It Too Late To Consider Buying Deutsche Post AG (ETR:DPW)?

Today we're going to take a look at the well-established Deutsche Post AG (ETR:DPW). The company's stock received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €41.76 at one point, and dropping to the lows of €34.24. 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 €36.60 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.

View our latest analysis for Deutsche Post

What Is Deutsche Post Worth?

According to my 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. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.23x is currently trading slightly below its industry peers’ ratio of 11.47x, which means if you buy Deutsche Post today, you’d be paying a decent 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. Is there another opportunity to buy low in the future? Since Deutsche Post’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Deutsche Post look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a negative profit growth of -5.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Deutsche Post. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, DPW appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on DPW, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on DPW for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on DPW should the price fluctuate below the industry PE ratio.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 1 warning sign with Deutsche Post, and understanding it should be part of your investment process.

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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.