Koenig & Bauer AG (ETR:SKB), is not the largest company out there, but it saw significant share price movement during recent months on the XTRA, rising to highs of €19.56 and falling to the lows of €13.44. 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 Koenig & Bauer's current trading price of €13.50 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 Koenig & Bauer’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Koenig & Bauer
What's The Opportunity In Koenig & Bauer?
According to my 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. 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 14.12x is currently trading in-line with its industry peers’ ratio, which means if you buy Koenig & Bauer today, you’d be paying a relatively sensible price for it. So, is there another chance to buy low in the future? Given that Koenig & Bauer’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 Koenig & Bauer?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 more than double over the next couple of years, the future seems bright for Koenig & Bauer. 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? SKB’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 track record of its management team. Have these factors changed since the last time you looked at SKB? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?