Should You Investigate Koninklijke Philips N.V. (AMS:PHIA) At €16.45?
Koninklijke Philips N.V. (AMS:PHIA) received a lot of attention from a substantial price increase on the ENXTAM over the last few months. 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, could the stock still be trading at a relatively cheap price? Let’s examine Koninklijke Philips’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Koninklijke Philips
Is Koninklijke Philips Still Cheap?
Great news for investors – Koninklijke Philips is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €26.58, but it is currently trading at €16.45 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Koninklijke Philips’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Koninklijke Philips 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. Koninklijke Philips' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since PHIA is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PHIA for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PHIA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 2 warning signs for Koninklijke Philips and you'll want to know about them.
If you are no longer interested in Koninklijke Philips, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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