What Is Naturgy Energy Group, S.A.'s (BME:NTGY) Share Price Doing?

Naturgy Energy Group, S.A. (BME:NTGY) received a lot of attention from a substantial price movement on the BME over the last few months, increasing to €24.01 at one point, and dropping to the lows of €21.48. 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 Naturgy Energy Group's current trading price of €23.22 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 Naturgy Energy Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Naturgy Energy Group

What's the opportunity in Naturgy Energy Group?

According to my valuation model, Naturgy Energy Group seems to be fairly priced at around 12% 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 the company’s true value is €26.48, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Naturgy Energy Group’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Naturgy Energy Group?

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. Naturgy Energy Group's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on NTGY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 2 warning signs for Naturgy Energy Group and you'll want to know about them.

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

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.

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