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While UNITEDLABELS Aktiengesellschaft (ETR:ULC) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €2.12 at one point, and dropping to the lows of €1.53. 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 UNITEDLABELS' current trading price of €1.53 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 UNITEDLABELS’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for UNITEDLABELS
What Is UNITEDLABELS Worth?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. 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 UNITEDLABELS’s ratio of 17.16x is trading slightly above its industry peers’ ratio of 14.75x, which means if you buy UNITEDLABELS today, you’d be paying a relatively reasonable price for it. And if you believe that UNITEDLABELS should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, UNITEDLABELS’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of UNITEDLABELS look like?
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. With profit expected to grow by 71% over the next couple of years, the future seems bright for UNITEDLABELS. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in ULC’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ULC? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?