At kr.143, Is Nilfisk Holding A/S (CPH:NLFSK) Worth Looking At Closely?

Nilfisk Holding A/S (CPH:NLFSK), is not the largest company out there, but it received a lot of attention from a substantial price movement on the CPSE over the last few months, increasing to kr.185 at one point, and dropping to the lows of kr.139. 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 Nilfisk Holding's current trading price of kr.143 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 Nilfisk Holding’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 Nilfisk Holding

What's The Opportunity In Nilfisk Holding?

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. 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 Nilfisk Holding’s ratio of 11.91x is trading slightly below its industry peers’ ratio of 14.13x, which means if you buy Nilfisk Holding today, you’d be paying a decent price for it. And if you believe that Nilfisk Holding 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 Nilfisk Holding’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.

Can we expect growth from Nilfisk Holding?

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. Nilfisk Holding's earnings over the next few years are expected to increase by 57%, 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? NLFSK’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 NLFSK? 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 an eye on NLFSK, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for NLFSK, which means it’s worth diving deeper into 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 Nilfisk Holding as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Nilfisk Holding you should be aware of.

If you are no longer interested in Nilfisk Holding, 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.