At €51.95, Is Koninklijke Heijmans N.V. (AMS:HEIJM) Worth Looking At Closely?

Koninklijke Heijmans N.V. (AMS:HEIJM), is not the largest company out there, but it led the ENXTAM gainers with a relatively large price hike in the past couple of weeks. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Koninklijke Heijmans’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What's The Opportunity In Koninklijke Heijmans?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 15.86x is currently trading slightly above its industry peers’ ratio of 15.3x, which means if you buy Koninklijke Heijmans today, you’d be paying a relatively reasonable price for it. And if you believe that Koninklijke Heijmans should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Although, there may be an opportunity to buy in the future. This is because Koninklijke Heijmans’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.

View our latest analysis for Koninklijke Heijmans

Can we expect growth from Koninklijke Heijmans?

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. With profit expected to grow by 51% over the next couple of years, the future seems bright for Koninklijke Heijmans. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in HEIJM’s positive outlook, 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 HEIJM? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on HEIJM, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for HEIJM, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

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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.