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Top Undervalued German Stocks To Watch In June 2024

Amidst a backdrop of political uncertainty and fluctuating markets across Europe, Germany's DAX index has not been immune to the pressures, experiencing a notable decline. In such an environment, identifying undervalued stocks becomes particularly compelling as investors look for potential resilience and growth opportunities in less favorable economic conditions.

Top 10 Undervalued Stocks Based On Cash Flows In Germany

Name

Current Price

Fair Value (Est)

Discount (Est)

Novem Group (XTRA:NVM)

€5.66

€10.86

47.9%

Verbio (XTRA:VBK)

€17.25

€28.24

38.9%

elumeo (XTRA:ELB)

€2.44

€4.77

48.8%

MTU Aero Engines (XTRA:MTX)

€227.90

€397.14

42.6%

Stratec (XTRA:SBS)

€47.35

€80.11

40.9%

CHAPTERS Group (XTRA:CHG)

€23.80

€44.54

46.6%

SBF (DB:CY1K)

€2.96

€5.22

43.3%

Redcare Pharmacy (XTRA:RDC)

€116.30

€197.69

41.2%

Your Family Entertainment (DB:RTV)

€2.42

€4.08

40.6%

Dr. Hönle (XTRA:HNL)

€19.85

€33.15

40.1%

Click here to see the full list of 30 stocks from our Undervalued German Stocks Based On Cash Flows screener.

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We're going to check out a few of the best picks from our screener tool

MTU Aero Engines

Overview: MTU Aero Engines AG operates in the development, manufacture, marketing, and support of commercial and military aircraft engines as well as industrial gas turbines globally, with a market capitalization of approximately €12.27 billion.

Operations: MTU Aero Engines generates revenue through two primary segments: the Commercial Maintenance Business (MRO), which brought in €4.35 billion, and the Commercial and Military Engine Business (OEM), which accounted for €1.27 billion.

Estimated Discount To Fair Value: 42.6%

MTU Aero Engines, trading at €227.9, is significantly undervalued based on a DCF valuation of €397.14, indicating a potential investment opportunity. The company's revenue growth at 12.2% per year outpaces the German market's 5.1%, with earnings expected to grow by 35.5% annually. Despite a slight dip in Q1 2024 profits with net income at €126 million down from €134 million year-over-year, MTU is forecasted to achieve high return on equity of 20.3% in three years, supporting its growth trajectory above the market average.

XTRA:MTX Discounted Cash Flow as at Jun 2024
XTRA:MTX Discounted Cash Flow as at Jun 2024

Novem Group

Overview: Novem Group S.A., based in Luxembourg, specializes in developing and supplying trim elements and decorative function elements for car interiors globally, with a market capitalization of €243.55 million.

Operations: The company generates €635.50 million from its auto parts and accessories segment.

Estimated Discount To Fair Value: 47.9%

Novem Group S.A., priced at €5.66, is considered highly undervalued with an estimated fair value of €10.86, reflecting a 47.9% potential undervaluation. Despite recent earnings declines—full-year net income dropped to €34.8 million from €50 million—the company is expected to see substantial earnings growth at 28.1% annually over the next three years, outpacing the German market forecast of 18.5%. However, it carries a high level of debt and has an unstable dividend track record, posing risks to its financial stability.

XTRA:NVM Discounted Cash Flow as at Jun 2024
XTRA:NVM Discounted Cash Flow as at Jun 2024

Kontron

Overview: Kontron AG is a company based in Austria that specializes in providing Internet of Things (IoT) solutions globally, with a market capitalization of approximately €1.25 billion.

Operations: The company generates revenue primarily from three segments: Europe (€971.03 million), Global (€269.17 million), and Software + Solutions (€306.81 million).

Estimated Discount To Fair Value: 35.8%

Kontron AG, with a current trading price of €20.3, appears undervalued based on DCF analysis, suggesting a fair value of €31.64. Recent product launches like the VX6096 and XMC-ETH6 highlight its commitment to enhancing high-performance computing capabilities, potentially boosting future cash flows. However, despite significant expected earnings growth over the next three years and trading 35.8% below estimated fair value, concerns remain due to an unstable dividend track record and only moderate revenue growth forecasts compared to the market.

XTRA:SANT Discounted Cash Flow as at Jun 2024
XTRA:SANT Discounted Cash Flow as at Jun 2024

Seize The Opportunity

Interested In Other Possibilities?

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.

Companies discussed in this article include XTRA:MTX XTRA:NVM and XTRA:SANT.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com