Orion Engineered Carbons SA ( NYSE:OEC ), which is in the chemicals business, and is based in Luxembourg, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $36 and falling to the lows of $23.85. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Orion Engineered Carbons’s current trading price of $24.68 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 Orion Engineered Carbons’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Orion Engineered Carbons still cheap?
According to my valuation model, the stock is currently overvalued by about 31.76%, trading at US$24.68 compared to my intrinsic value of $18.73. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Orion Engineered Carbons’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.
What does the future of Orion Engineered Carbons 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. 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 a double-digit 11% over the next couple of years, the outlook is positive for Orion Engineered Carbons. 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? OEC’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 OEC 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 OEC 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 optimistic prospect is encouraging for OEC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Orion Engineered Carbons. You can find everything you need to know about Orion Engineered Carbons in the latest infographic research report . If you are no longer interested in Orion Engineered Carbons, you can use our free platform to see my list of over 50 other stocks with a high growth potential .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com .