What Is PGE Polska Grupa Energetyczna S.A.'s (WSE:PGE) Share Price Doing?

While PGE Polska Grupa Energetyczna S.A. (WSE:PGE) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the WSE. With many analysts covering the mid-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 examine PGE Polska Grupa Energetyczna’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for PGE Polska Grupa Energetyczna

Is PGE Polska Grupa Energetyczna Still Cheap?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that PGE Polska Grupa Energetyczna’s ratio of 5.54x is trading slightly above its industry peers’ ratio of 3.47x, which means if you buy PGE Polska Grupa Energetyczna today, you’d be paying a relatively reasonable price for it. And if you believe that PGE Polska Grupa Energetyczna should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. So, is there another chance to buy low in the future? Given that PGE Polska Grupa Energetyczna’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 PGE Polska Grupa Energetyczna?

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. 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. PGE Polska Grupa Energetyczna's earnings over the next few years are expected to increase by 78%, 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? PGE’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 PGE? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on PGE, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for PGE, 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 1 warning sign for PGE Polska Grupa Energetyczna and you'll want to know about this.

If you are no longer interested in PGE Polska Grupa Energetyczna, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.