What Does Mettler-Toledo International Inc.'s (NYSE:MTD) Share Price Indicate?

By
Simply Wall St
Published
December 24, 2021
NYSE:MTD
Source: Shutterstock

Today we're going to take a look at the well-established Mettler-Toledo International Inc. (NYSE:MTD). The company's stock saw a decent share price growth in the teens level on the NYSE over the last few months. As a large-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? Today I will analyse the most recent data on Mettler-Toledo International’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Mettler-Toledo International

What is Mettler-Toledo International worth?

The share price seems sensible at the moment 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 49.55x is currently trading slightly above its industry peers’ ratio of 44.62x, which means if you buy Mettler-Toledo International today, you’d be paying a relatively sensible price for it. And if you believe Mettler-Toledo International should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Mettler-Toledo International’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 Mettler-Toledo International?

earnings-and-revenue-growth
NYSE:MTD Earnings and Revenue Growth December 24th 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. Mettler-Toledo International's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? MTD’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 financial strength of the company. Have these factors changed since the last time you looked at MTD? 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 tabs on MTD, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for MTD, 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.

If you'd like to know more about Mettler-Toledo International as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Mettler-Toledo International you should know about.

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

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