When Should You Buy Naturgy Energy Group, S.A. (BME:NTGY)?

Let's talk about the popular Naturgy Energy Group, S.A. (BME:NTGY). The company's shares maintained its current share price over the past couple of month on the BME, with a relatively tight range of €20.92 to €22.57. However, does this price actually reflect the true 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.

See 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 4.93% above my intrinsic value, which means if you buy Naturgy Energy Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €20.77, there’s only an insignificant downside when the price falls to its real value. What's more, Naturgy Energy Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Naturgy Energy Group generate?

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. 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? It seems like the market has already priced in NTGY’s positive outlook, 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 an eye on NTGY, now may not be the most advantageous 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 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 Naturgy Energy Group as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Naturgy Energy Group and we think they deserve your attention.

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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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