Is Dometic Group AB (publ) (STO:DOM) Potentially Undervalued?

Dometic Group AB (publ) (STO:DOM), is not the largest company out there, but it led the OM gainers with a relatively large price hike in the past couple of weeks. 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 take a look at Dometic Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Dometic Group

What Is Dometic Group Worth?

Great news for investors – Dometic Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is SEK110.99, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Dometic Group’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What Kind Of Returns Can We Expect From Dometic Group In The Future?

What kind of returns can we expect from Dometic Group in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. We can determine the quality of a stock many ways; one way is to look at how much return it generates relative to the money we’ve invested in the stock. Dometic Group is expected to return 7.2% of your investment in the next couple of years if you buy the stock today. This is a pretty average return, which doesn’t significantly add much to the case for owning the stock.

What This Means For You

Are you a shareholder? Although DOM is currently undervalued, the low future return begs the question – is there a better opportunity elsewhere? Think about whether you want to increase your portfolio exposure to DOM, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on DOM for some time, but hesitant on making the leap, I recommend you research further into the stock. Since it is currently undervalued, now is a great time to make a decision. But keep in mind the low future return, and whether the opportunity cost of investing in DOM versus another stock is worth it.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Dometic Group and you'll want to know about this.

If you are no longer interested in Dometic 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. 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.