Yahoo Finance Is It Time To Consider Buying Covestro AG (ETR:1COV)?
Covestro AG (ETR:1COV), which is in the chemicals business, and is based in Germany, received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €46.95 at one point, and dropping to the lows of €39.89. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Covestro's current trading price of €40.64 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Covestro’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Covestro
What's the opportunity in Covestro?
Great news for investors – Covestro is still trading at a fairly cheap price. 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 12.53x is currently well-below the industry average of 22.66x, meaning that it is trading at a cheaper price relative to its peers. However, given that Covestro’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.
What does the future of Covestro 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. However, with a relatively muted profit growth of 4.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Covestro, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since 1COV is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. 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 1COV for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1COV. 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Covestro. You can find everything you need to know about Covestro in the latest infographic research report. If you are no longer interested in Covestro, 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.
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