Is Now The Time To Look At Buying Naturgy Energy Group, S.A. (BME:NTGY)?

Today we're going to take a look at the well-established Naturgy Energy Group, S.A. (BME:NTGY). The company's stock saw a decent share price growth in the teens level on the BME over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Naturgy Energy Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Naturgy Energy Group

Is Naturgy Energy Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% below my intrinsic value, which means if you buy Naturgy Energy Group today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €21.18, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Naturgy Energy Group has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Naturgy Energy Group?

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. With profit expected to grow by 37% over the next couple of years, the future seems bright for Naturgy Energy Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? NTGY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on NTGY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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 want to dive deeper into Naturgy Energy Group, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Naturgy Energy Group, and understanding them should be part of your investment process.

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This article by Simply Wall St is general in nature. 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.
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