Exploring Three German Exchange Stocks With Intrinsic Discounts Ranging From 22.3% To 33.7%

Amidst a backdrop of varied global market performances, Germany's DAX index has shown resilience with a notable gain of 1.35% recently, reflecting investor optimism in certain sectors despite broader economic uncertainties. In such an environment, identifying stocks that appear undervalued relative to their intrinsic worth could offer interesting opportunities for investors looking for potential growth amidst prevailing market conditions.

Top 10 Undervalued Stocks Based On Cash Flows In Germany

Name	Current Price	Fair Value (Est)	Discount (Est)
Stabilus (XTRA:STM)	€42.45	€78.81	46.1%
technotrans (XTRA:TTR1)	€16.50	€29.05	43.2%
Allgeier (XTRA:AEIN)	€16.40	€26.01	36.9%
Stratec (XTRA:SBS)	€41.30	€82.14	49.7%
CHAPTERS Group (XTRA:CHG)	€24.00	€43.23	44.5%
MTU Aero Engines (XTRA:MTX)	€257.90	€421.69	38.8%
Vitesco Technologies Group (XTRA:VTSC)	€56.45	€111.53	49.4%
Your Family Entertainment (DB:RTV)	€2.48	€4.56	45.6%
INTERSHOP Communications (XTRA:ISHA)	€2.00	€3.56	43.8%
Dr. Hönle (XTRA:HNL)	€18.05	€34.92	48.3%

Click here to see the full list of 26 stocks from our Undervalued German Stocks Based On Cash Flows screener.

Let's review some notable picks from our screened stocks.

adidas

Overview: Adidas AG operates globally, designing, developing, producing, and marketing athletic and sports lifestyle products with a market capitalization of approximately €41.60 billion.

Operations: Adidas generates revenue from several geographical segments, with €5.16 billion from North America, €3.20 billion from Greater China, and €2.31 billion from Latin America.

Estimated Discount To Fair Value: 33.7%

Adidas AG, currently trading at €233, is valued below our fair value estimate of €351.18, indicating a potential undervaluation of 33.7%. The company has shown robust financial recovery with its Q1 2024 net income reaching €170 million from a prior loss and has raised its full-year earnings guidance significantly to around €1 billion. With expected annual earnings growth of 40.96% and revenue growth forecasts outpacing the German market at 8.1%, Adidas demonstrates strong future profitability prospects despite facing significant currency headwinds impacting profitability and gross margin development in 2024.

• Upon reviewing our latest growth report, adidas' projected financial performance appears quite optimistic.

• Take a closer look at adidas' balance sheet health here in our report.

XTRA:ADS Discounted Cash Flow as at Jul 2024

Gerresheimer

Overview: Gerresheimer AG is a global manufacturer and supplier of medicine packaging and drug delivery devices, with a market capitalization of approximately €3.23 billion.

Operations: The company generates revenue from three primary segments: Plastics & Devices (€1.11 billion), Advanced Technologies (€6.21 million), and Primary Packaging Glass (€892.01 million).

Estimated Discount To Fair Value: 28.4%

Gerresheimer AG, priced at €93.75, appears undervalued against a fair value estimate of €130.89, reflecting a substantial discount. Despite recent earnings showing a slight decline with net income at €32.46 million in Q2 2024 from €34.43 million the previous year, the company's financial outlook remains positive with expected revenue growth outpacing the German market at 11.1% annually and forecasted earnings growth of 22.22% per year. However, it carries a high level of debt which could be seen as a financial risk moving forward.

• Insights from our recent growth report point to a promising forecast for Gerresheimer's business outlook.

• Get an in-depth perspective on Gerresheimer's balance sheet by reading our health report here.

XTRA:GXI Discounted Cash Flow as at Jul 2024

SAP

Overview: SAP SE operates globally, offering a wide range of applications, technology, and services through its subsidiaries, with a market capitalization of approximately €228.36 billion.

Operations: The company generates €32.54 billion in revenue from its Applications, Technology & Services segment.

Estimated Discount To Fair Value: 22.3%

SAP SE, with a current price of €195.78, is trading below its calculated fair value of €251.97, suggesting undervaluation based on discounted cash flows. Despite a significant drop in net income to €94 million for the first half of 2024 from last year's €3,640 million and recent earnings volatility due to large one-off items, SAP's revenue growth projections remain robust at 10% per year—outpacing the German market average of 5.3%. Earnings are also expected to surge by approximately 37.7% annually over the next three years, exceeding the market forecast of 19.7%. This growth trajectory is supported by strategic expansions like Kyndryl’s adoption and service extension for SAP solutions which could enhance long-term value despite short-term earnings inconsistencies.

• According our earnings growth report, there's an indication that SAP might be ready to expand.

• Click to explore a detailed breakdown of our findings in SAP's balance sheet health report.

XTRA:SAP Discounted Cash Flow as at Jul 2024

Taking Advantage

• Navigate through the entire inventory of 26 Undervalued German Stocks Based On Cash Flows here.

• Invested in any of these stocks? Simplify your portfolio management with Simply Wall St and stay ahead with our alerts for any critical updates on your stocks.

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Ready To Venture Into Other Investment Styles?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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.

Companies discussed in this article include XTRA:ADS XTRA:GXI and XTRA:SAP.

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