Why Naturgy Energy Group, S.A. (BME:NTGY) Could Be Worth Watching

Naturgy Energy Group, S.A. (BME:NTGY) saw a double-digit share price rise of over 10% in the past couple of months on the BME. 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. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Naturgy Energy Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Naturgy Energy Group

What is Naturgy Energy Group worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.4% below my intrinsic value, which means if you buy Naturgy Energy Group today, you’d be paying a fair price for it. And if you believe the company’s true value is €21.45, then there’s not much of an upside to gain from mispricing. Furthermore, Naturgy Energy Group’s low beta implies that the stock is less volatile than the wider market.

What does the future of Naturgy Energy Group look like?

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. With revenues expected to grow by a double-digit 19% over the next couple of years, the outlook is positive for Naturgy Energy Group. If the level of expenses is able to be maintained, 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? 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 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 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. 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.

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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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