Should You Investigate Coca-Cola HBC AG (LON:CCH) At UK£25.73?

Simply Wall St
November 15, 2021
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Today we're going to take a look at the well-established Coca-Cola HBC AG (LON:CCH). The company's stock received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£27.18 at one point, and dropping to the lows of UK£23.76. 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 Coca-Cola HBC's current trading price of UK£25.73 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 Coca-Cola HBC’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 Coca-Cola HBC

Is Coca-Cola HBC still cheap?

According to my valuation model, Coca-Cola HBC seems to be fairly priced at around 11% below my intrinsic value, which means if you buy Coca-Cola HBC today, you’d be paying a reasonable price for it. And if you believe the company’s true value is £28.88, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Coca-Cola HBC’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 Coca-Cola HBC?

LSE:CCH Earnings and Revenue Growth November 16th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Coca-Cola HBC's earnings over the next few years are expected to increase by 27%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? CCH’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on CCH, 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 Coca-Cola HBC, you'd also look into what risks it is currently facing. For example - Coca-Cola HBC has 3 warning signs we think you should be aware of.

If you are no longer interested in Coca-Cola HBC, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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