LS telcom AG (ETR:LSX), is not the largest company out there, but it saw significant share price movement during recent months on the XTRA, rising to highs of €5.62 and falling to the lows of €4.57. 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 LS telcom's current trading price of €4.77 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at LS telcom’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is LS telcom Still Cheap?
Good news, investors! LS telcom is still a bargain right now. According to my valuation, the intrinsic value for the stock is €6.40, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, LS telcom’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will LS telcom generate?
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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for LS telcom, at least in the near future.
What This Means For You
Are you a shareholder? Although LSX is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to LSX, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on LSX for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you want to dive deeper into LS telcom, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for LS telcom (1 is significant) you should be familiar with.
If you are no longer interested in LS telcom, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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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