Yahoo Finance Is ElringKlinger AG (FRA:ZIL2) A Growth Engine In The Auto Industry?
ElringKlinger AG (FRA:ZIL2), a €678.59m small-cap, operates in the auto industry which is a major player in the economy due to its high commodity consumption. New growth opportunities in smart cars and software is not the traditional focus for most auto companies. Automobile analysts are forecasting for the entire industry, a strong double-digit growth of 17.96% in the upcoming year , and an enormous growth of 35.11% over the next couple of years. However this rate still came in below the growth rate of the DE Below, I will examine the sector growth prospects, and also determine whether ElringKlinger is a laggard or leader relative to its automobile sector peers.
See our latest analysis for ElringKlinger
What’s the catalyst for ElringKlinger’s sector growth?
The growing presence in the auto industry of technology firms incontrovertible. Over the past year, the industry saw growth of 7.03%, though still underperforming the wider DE stock market. ElringKlinger lags the pack with its negative growth rate of -18.44% over the past year, which indicates the company has been growing at a slower pace than its automobile peers. Although ElringKlinger is poised to deliver a 6.60% growth next year, moving it from negative to positive territory, it still lags its industry average rate of growth of 17.96%.
Is ElringKlinger and the sector relatively cheap?
Automobile companies are typically trading at a PE of 13.98x, in-line with the DE stock market PE of 17.97x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 13.07% on equities compared to the market’s 11.72%, potentially illustrative of a turnaround. On the stock-level, ElringKlinger is trading at a PE ratio of 9.62x, which is relatively in-line with the average automobile stock. In terms of returns, ElringKlinger generated 8.22% in the past year, which is 4.86% below the automobile sector.
Next Steps:
If ElringKlinger has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is an automobile industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the automobile sector. However, before you make a decision on the stock, I suggest you look at ElringKlinger’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has ZIL2’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ElringKlinger? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
