ecotel communication ag (ETR:E4C), 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 €15.50 at one point, and dropping to the lows of €12.35. 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 ecotel communication ag's current trading price of €12.85 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 ecotel communication ag’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 ecotel communication ag

What Is ecotel communication ag Worth?

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. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that ecotel communication ag’s ratio of 31.14x is trading slightly below its industry peers’ ratio of 36.36x, which means if you buy ecotel communication ag today, you’d be paying a reasonable price for it. And if you believe ecotel communication ag 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. Furthermore, ecotel communication ag’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of ecotel communication ag look like?

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. ecotel communication ag's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in E4C’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 E4C? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?