Is De’Longhi S.p.A. (BIT:DLG) Potentially Undervalued?
De’Longhi S.p.A. (BIT:DLG), which is in the consumer durables business, and is based in Italy, saw a double-digit share price rise of over 10% in the past couple of months on the BIT. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine De’Longhi’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for De’Longhi
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What is De’Longhi worth?
According to my valuation model, De’Longhi seems to be fairly priced at around 0.94% above my intrinsic value, which means if you buy De’Longhi today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €24.05, then there isn’t really any room for the share price grow beyond what it’s currently trading. What’s more, De’Longhi’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will De’Longhi generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. De’Longhi’s earnings over the next few years are expected to increase by 40%, 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 already priced in DLG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on DLG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on De’Longhi. You can find everything you need to know about De’Longhi in the latest infographic research report. If you are no longer interested in De’Longhi, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
