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Schweizer Electronic AG (ETR:SCE), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €6.05 and falling to the lows of €5.10. 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 Schweizer Electronic's current trading price of €5.10 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Schweizer Electronic’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 Schweizer Electronic
Is Schweizer Electronic Still Cheap?
Good news, investors! Schweizer Electronic is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. We’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 0.55x is currently well-below the industry average of 18.91x, meaning that it is trading at a cheaper price relative to its peers. However, given that Schweizer Electronic’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 growth will Schweizer Electronic generate?
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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Schweizer Electronic, at least in the near future.
What This Means For You
Are you a shareholder? Although SCE is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to SCE, 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 an eye on SCE for a while, but hesitant on making the leap, we recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.