In This Article:
Carl Zeiss Meditec AG (XTRA:AFX), a medical equipment company based in Germany, saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Carl Zeiss Meditec’s outlook and valuation to see if the opportunity still exists. See our latest analysis for Carl Zeiss Meditec
What is Carl Zeiss Meditec worth?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Carl Zeiss Meditec’s ratio of 37.78x is trading slightly below its industry peers’ ratio of 38.95x, which means if you buy Carl Zeiss Meditec today, you’d be paying a reasonable price for it. And if you believe Carl Zeiss Meditec should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like Carl Zeiss Meditec’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Carl Zeiss Meditec 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. With profit expected to grow by 27.52% over the next couple of years, the future seems bright for Carl Zeiss Meditec. It looks like higher cash flows 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 AFX’s positive outlook, with shares trading around its fair value. 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 AFX? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on AFX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for AFX, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.