What Is Mercedes-Benz Group AG’s (ETR:MBG) Share Price Doing?

Let’s talk about the popular Mercedes-Benz Group AG (ETR:MBG). The company’s shares saw a decent share price growth in the teens level on the XTRA over the last few months. With many analysts covering the large-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? Today I will analyse the most recent data on Mercedes-Benz Group’s outlook and valuation to see if the opportunity still exists.

Check out the opportunities and risks within the DE Auto industry.

Is Mercedes-Benz Group Still Cheap?

According to my valuation model, Mercedes-Benz Group seems to be fairly priced at around 12% below my intrinsic value, which means if you buy Mercedes-Benz Group today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €68.18, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Mercedes-Benz Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Mercedes-Benz Group generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 negative profit growth of -4.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Mercedes-Benz Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? MBG seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on MBG for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on MBG should the price fluctuate below its true value.

If you’d like to know more about Mercedes-Benz Group as a business, it’s important to be aware of any risks it’s facing. For example, Mercedes-Benz Group has 3 warning signs (and 2 which don’t sit too well with us) we think you should know about.

If you are no longer interested in Mercedes-Benz Group, 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.