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Today we're going to take a look at the well-established HOCHTIEF Aktiengesellschaft (ETR:HOT). The company's stock saw a significant share price rise of 23% in the past couple of months on the XTRA. While good news for shareholders, the company has traded much higher in the past year. 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? Let’s examine HOCHTIEF’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
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Is HOCHTIEF Still Cheap?
According to our 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, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that HOCHTIEF’s ratio of 15.46x is trading slightly above its industry peers’ ratio of 13.33x, which means if you buy HOCHTIEF today, you’d be paying a relatively reasonable price for it. And if you believe that HOCHTIEF should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like HOCHTIEF’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.
Check out our latest analysis for HOCHTIEF
What does the future of HOCHTIEF look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. HOCHTIEF'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? HOT’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 HOT? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?