Yahoo Finance Why Wüstenrot & Württembergische AG (ETR:WUW) Could Be Worth Watching
Wüstenrot & Württembergische AG (ETR:WUW), which is in the insurance business, and is based in Germany, saw a significant share price rise of over 20% in the past couple of months on the XTRA. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Wüstenrot & Württembergische’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Wüstenrot & Württembergische
What is Wüstenrot & Württembergische worth?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 5.75x is currently trading slightly below its industry peers’ ratio of 9.35x, which means if you buy Wüstenrot & Württembergische today, you’d be paying a reasonable price for it. And if you believe that Wüstenrot & Württembergische should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like Wüstenrot & Württembergische’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Wüstenrot & Württembergische generate?
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. 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 a relatively muted profit growth of 4.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Wüstenrot & Württembergische, at least in the short term.
What this means for you:
Are you a shareholder? WUW’s 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 financial strength of the company. Have these factors changed since the last time you looked at WUW? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on WUW, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Wüstenrot & Württembergische. You can find everything you need to know about Wüstenrot & Württembergische in the latest infographic research report. If you are no longer interested in Wüstenrot & Württembergische, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
