LANXESS Aktiengesellschaft (ETR:LXS), is not the largest company out there, but it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €30.62 at one point, and dropping to the lows of €20.56. 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 LANXESS' current trading price of €21.29 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 LANXESS’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for LANXESS

What's The Opportunity In LANXESS?

According to my valuation model, LANXESS seems to be fairly priced at around 3.75% above my intrinsic value, which means if you buy LANXESS today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth €20.52, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that LANXESS’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from LANXESS?

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 expected decline of -1.0% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for LANXESS. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? LXS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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.