At €17.07, Is Siemens Gamesa Renewable Energy, S.A. (BME:SGRE) Worth Looking At Closely?

By
Simply Wall St
Published
February 17, 2022
BME:SGRE
Source: Shutterstock

Today we're going to take a look at the well-established Siemens Gamesa Renewable Energy, S.A. (BME:SGRE). The company's stock received a lot of attention from a substantial price movement on the BME over the last few months, increasing to €23.53 at one point, and dropping to the lows of €16.29. 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 Siemens Gamesa Renewable Energy's current trading price of €17.07 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 Siemens Gamesa Renewable Energy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Siemens Gamesa Renewable Energy

What's the opportunity in Siemens Gamesa Renewable Energy?

According to my valuation model, the stock is currently overvalued by about 22%, trading at €17.07 compared to my intrinsic value of €13.98. This means that the opportunity to buy Siemens Gamesa Renewable Energy at a good price has disappeared! In addition to this, it seems like Siemens Gamesa Renewable Energy’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, 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.

What kind of growth will Siemens Gamesa Renewable Energy generate?

earnings-and-revenue-growth
BME:SGRE Earnings and Revenue Growth February 17th 2022

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. In the upcoming year, Siemens Gamesa Renewable Energy's earnings are expected to increase by 48%, 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? SGRE’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SGRE should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on SGRE for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for SGRE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Siemens Gamesa Renewable Energy, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Siemens Gamesa Renewable Energy and you'll want to know about this.

If you are no longer interested in Siemens Gamesa Renewable Energy, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.