While RATIONAL Aktiengesellschaft (ETR:RAA) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. The company is inching closer to its yearly highs following the recent share price climb. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at RATIONAL’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for RATIONAL

What's The Opportunity In RATIONAL?

RATIONAL appears to be overvalued by 34% at the moment, based on our discounted cash flow valuation. The stock is currently priced at €806 on the market compared to our intrinsic value of €600.17. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that RATIONAL’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from RATIONAL?

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. RATIONAL's earnings over the next few years are expected to increase by 28%, 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? RAA’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RAA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on RAA for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for RAA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.