Today we're going to take a look at the well-established Akzo Nobel N.V. (AMS:AKZA). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the ENXTAM. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Akzo Nobel’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Akzo Nobel

What Is Akzo Nobel Worth?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.11x is currently trading slightly below its industry peers’ ratio of 18.22x, which means if you buy Akzo Nobel today, you’d be paying a decent price for it. And if you believe Akzo Nobel should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Akzo Nobel’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 Akzo Nobel 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. Akzo Nobel's earnings over the next few years are expected to increase by 34%, 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? AKZA’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at AKZA? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?