Is it time to consider buying X-FAB Silicon Foundries SE (EPA:XFAB)?

While X-FAB Silicon Foundries SE (EPA:XFAB) may not be the largest market cap in the market, it has received a lot of attention due to a substantial price movement in ENXTPA over the past few months, rising to €7.17 at one point, and dropping to as low as €5.93. Some stock price movements can give investors a better opportunity to enter the stock and potentially buy at a lower price. One question that needs to be answered is whether X-FAB Silicon Foundries’ current price of €6.29 reflects the true value of the small cap? Or is it currently undervalued, giving us an opportunity to buy? Let’s take a look at X-FAB Silicon Foundries’ outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for X-FAB Silicon Foundries

What is the value of X-FAB Silicon Foundries?

Great news for investors: X-FAB Silicon Foundries is still trading at a fairly cheap price according to our price multiple model, where we compare the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (PE) ratio since there is not enough information to reliably forecast the stock’s cash flows. We note that X-FAB Silicon Foundries’ ratio of 6.24x is below its peer average of 15.84x, indicating that the stock is trading at a discount relative to the semiconductor industry. However, since X-FAB Silicon Foundries’ stock is quite volatile (i.e. its price movements are magnified relative to the rest of the market), this could mean that the price can decline, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator of stock price volatility.

What kind of growth will X-FAB Silicon Foundries generate?

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. While value investors argue that it’s the intrinsic value relative to the price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With earnings expected to grow 34% over the next two years, the future looks bright for X-FAB Silicon Foundries. It appears that higher cash flows are on the cards for the stock, which should translate into a higher share valuation.

What this means for you

Are you a shareholder? Given that XFAB’s P/E ratio is currently below the industry’s P/E ratio, now may be a good time to increase your holdings in the stock. With a positive outlook on the horizon, it appears that this growth has not yet been fully factored into the stock price. However, other factors, such as financial health, should also be considered, which could explain the current price multiple.

Are you a potential investor? If you have been keeping an eye on XFAB for a while, now might be a good time to invest in the stock. Its prospects for prosperous future earnings are not yet fully reflected in the current share price, which means it is not too late to buy XFAB. But before making an investment decision, consider other factors such as the track record of its management team, in order to make an informed investment decision.

It can be very useful to consider the latest analyst forecasts for X-FAB Silicon Foundries. Fortunately, you can check out the analyst forecasts by clicking here.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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