Yahoo Finance Is Pfeiffer Vacuum Technology AG (ETR:PFV) Potentially Undervalued?
Pfeiffer Vacuum Technology AG (ETR:PFV), is not the largest company out there, but it led the XTRA gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Pfeiffer Vacuum Technology’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Pfeiffer Vacuum Technology
Is Pfeiffer Vacuum Technology Still Cheap?
Pfeiffer Vacuum Technology is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison 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 22.04x is currently well-above the industry average of 16.6x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that Pfeiffer Vacuum Technology’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.
Can we expect growth from Pfeiffer Vacuum Technology?
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 grow by a double-digit 16% over the next couple of years, the outlook is positive for Pfeiffer Vacuum Technology. 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? PFV’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe PFV 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.
Are you a potential investor? If you’ve been keeping an eye on PFV for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for PFV, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Pfeiffer Vacuum Technology as a business, it's important to be aware of any risks it's facing. For example, Pfeiffer Vacuum Technology has 3 warning signs (and 1 which is potentially serious) we think you should know about.
If you are no longer interested in Pfeiffer Vacuum Technology, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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