Is Now An Opportune Moment To Examine Hapag-Lloyd Aktiengesellschaft (ETR:HLAG)?

Let's talk about the popular Hapag-Lloyd Aktiengesellschaft (ETR:HLAG). The company's shares saw significant share price movement during recent months on the XTRA, rising to highs of €232 and falling to the lows of €172. 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 Hapag-Lloyd's current trading price of €172 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 Hapag-Lloyd’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 Hapag-Lloyd

What's The Opportunity In Hapag-Lloyd?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 Hapag-Lloyd’s ratio of 2.68x is trading slightly below its industry peers’ ratio of 4.87x, which means if you buy Hapag-Lloyd today, you’d be paying a decent price for it. And if you believe that Hapag-Lloyd 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. So, is there another chance to buy low in the future? Given that Hapag-Lloyd’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Hapag-Lloyd generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Hapag-Lloyd, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, HLAG 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 de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on HLAG, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HLAG for a while, now may not be the most advantageous 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 crystallize your views on HLAG should the price fluctuate below the industry PE ratio.

So while earnings quality is important, it's equally important to consider the risks facing Hapag-Lloyd at this point in time. Case in point: We've spotted 2 warning signs for Hapag-Lloyd you should be mindful of and 1 of them doesn't sit too well with us.

If you are no longer interested in Hapag-Lloyd, 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.