PostNL N.V. (AMS:PNL), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the ENXTAM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine PostNL’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What Is PostNL Worth?
PostNL appears to be overvalued by 29% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €1.95 on the market compared to my intrinsic value of €1.51. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that PostNL’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.
Can we expect growth from PostNL?
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. 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. PostNL's earnings over the next few years are expected to increase by 88%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in PNL’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe PNL should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 PNL for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for PNL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into PostNL, you'd also look into what risks it is currently facing. Case in point: We've spotted 5 warning signs for PostNL you should be mindful of and 1 of these makes us a bit uncomfortable.
If you are no longer interested in PostNL, 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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