DEUTZ Aktiengesellschaft (ETR:DEZ), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the XTRA over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. But what if there is still an opportunity to buy? Let's take a look at DEUTZ's outlook and value based on the most recent financial data to see if the opportunity still exists.
DEUTZ is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to the industry average. We'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 50.97x is currently well-above the industry average of 18.92x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that DEUTZ'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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
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. DEUTZ's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
Are you a shareholder? It seems like the market has well and truly priced in DEZ's positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question - should I sell? If you believe DEZ should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.