Is There Now An Opportunity In X-FAB Silicon Foundries SE (EPA:XFAB)?
X-FAB Silicon Foundries SE (EPA:XFAB), is not the largest company out there, but it received a lot of attention from a substantial price increase on the ENXTPA over the last few months. With many analysts covering the 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 examine X-FAB Silicon Foundries’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for X-FAB Silicon Foundries
What Is X-FAB Silicon Foundries Worth?
According to my valuation model, X-FAB Silicon Foundries seems to be fairly priced at around 3.23% above my intrinsic value, which means if you buy X-FAB Silicon Foundries today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €8.16, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that X-FAB Silicon Foundries’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from X-FAB Silicon Foundries?
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. X-FAB Silicon Foundries' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 XFAB’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 track record of its management team. 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 XFAB, 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.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Be aware that X-FAB Silicon Foundries is showing 2 warning signs in our investment analysis and 1 of those doesn't sit too well with us...
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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.
X-FAB Silicon Foundries
X-FAB Silicon Foundries SE operates as an analog/mixed-signal semiconductor technology foundry.
Reasonable growth potential with adequate balance sheet.