At €162, Is It Time To Put Heidelberg Materials AG (ETR:HEI) On Your Watch List?

Simply Wall St · 04/20 06:57

Heidelberg Materials AG (ETR:HEI) received a lot of attention from a substantial price increase on the XTRA over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today we will analyse the most recent data on Heidelberg Materials’s outlook and valuation to see if the opportunity still exists.

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What's The Opportunity In Heidelberg Materials?

Heidelberg Materials appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 16.51x is currently well-above the industry average of 13.69x, meaning that it is trading at a more expensive price relative to its peers. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Heidelberg Materials’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

See our latest analysis for Heidelberg Materials

Can we expect growth from Heidelberg Materials?

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XTRA:HEI Earnings and Revenue Growth April 20th 2025

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. With profit expected to grow by 56% over the next couple of years, the future seems bright for Heidelberg Materials. 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? HEI’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe HEI should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 tabs on HEI for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for HEI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Heidelberg Materials at this point in time. Case in point: We've spotted 1 warning sign for Heidelberg Materials you should be aware of.

If you are no longer interested in Heidelberg Materials, you can use our free platform to see our list of over 50 other stocks with a high growth potential.