At US$10.52, Is It Time To Put GrafTech International Ltd. (NYSE:EAF) On Your Watch List?

By
Simply Wall St
Published
October 14, 2021
NYSE:EAF
Source: Shutterstock

GrafTech International Ltd. (NYSE:EAF), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$11.56 and falling to the lows of US$10.07. 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 GrafTech International's current trading price of US$10.52 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at GrafTech International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for GrafTech International

What's the opportunity in GrafTech International?

Great news for investors – GrafTech International is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.14x is currently well-below the industry average of 22.95x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because GrafTech International’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from GrafTech International?

earnings-and-revenue-growth
NYSE:EAF Earnings and Revenue Growth October 14th 2021

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. GrafTech International'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? Since EAF is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on EAF for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy EAF. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

If you want to dive deeper into GrafTech International, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for GrafTech International (of which 1 doesn't sit too well with us!) you should know about.

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

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.

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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.