At kr138, Is It Time To Put AB Electrolux (publ) (STO:ELUX B) On Your Watch List?

AB Electrolux (publ) (STO:ELUX B), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the OM. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine AB Electrolux’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for AB Electrolux

What Is AB Electrolux Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.2% below my intrinsic value, which means if you buy AB Electrolux today, you’d be paying a fair price for it. And if you believe that the stock is really worth SEK149.02, 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 AB Electrolux’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 AB Electrolux?

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. 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. Though in the case of AB Electrolux, it is expected to deliver a relatively unexciting top-line growth of 5.2% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in ELUX B’s future 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ELUX B, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - AB Electrolux has 1 warning sign we think you should be aware of.

If you are no longer interested in AB Electrolux, 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.