3 German Stocks Estimated To Be Trading At Discounts Up To 48.8%

As the German economy faces a forecasted contraction for the second consecutive year, with factory orders experiencing a significant decline, investors are keenly observing opportunities within the market. Amidst these challenging conditions, identifying undervalued stocks can be crucial as they may offer potential value when broader economic indicators suggest caution.

Top 10 Undervalued Stocks Based On Cash Flows In Germany

Name	Current Price	Fair Value (Est)	Discount (Est)
technotrans (XTRA:TTR1)	€16.60	€30.86	46.2%
init innovation in traffic systems (XTRA:IXX)	€35.80	€52.06	31.2%
2G Energy (XTRA:2GB)	€23.40	€41.15	43.1%
Formycon (XTRA:FYB)	€50.80	€81.82	37.9%
CeoTronics (DB:CEK)	€5.25	€10.08	47.9%
Gerresheimer (XTRA:GXI)	€82.45	€111.59	26.1%
Schweizer Electronic (XTRA:SCE)	€3.78	€7.19	47.5%
Your Family Entertainment (DB:RTV)	€2.42	€4.33	44.2%
MTU Aero Engines (XTRA:MTX)	€289.60	€565.82	48.8%
Basler (XTRA:BSL)	€8.68	€12.62	31.2%

Click here to see the full list of 20 stocks from our Undervalued German Stocks Based On Cash Flows screener.

Here we highlight a subset of our preferred stocks from the screener.

Gerresheimer (XTRA:GXI)

Overview: Gerresheimer AG, with a market cap of €2.85 billion, manufactures and sells medicine packaging, drug delivery devices, and solutions in Germany and internationally.

Operations: The company's revenue is primarily derived from its Plastics & Devices segment, generating €1.13 billion, followed by the Primary Packaging Glass segment with €885.56 million, and Advanced Technologies contributing €5.83 million.

Estimated Discount To Fair Value: 26.1%

Gerresheimer AG appears undervalued, trading at €82.45 against a fair value estimate of €111.59, suggesting a significant discount based on discounted cash flow analysis. Despite lowering its earnings guidance for 2024 and 2025, the company reported solid Q3 results with sales of €498.5 million and net income of €40.1 million. Earnings are forecast to grow significantly over the next three years, although Gerresheimer carries a high level of debt which may impact financial flexibility.

• Our growth report here indicates Gerresheimer may be poised for an improving outlook.
• Unlock comprehensive insights into our analysis of Gerresheimer stock in this financial health report.

MTU Aero Engines (XTRA:MTX)

Overview: MTU Aero Engines AG is involved in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines as well as aero-derivative industrial gas turbines globally, with a market cap of approximately €15.59 billion.

Operations: MTU Aero Engines AG's revenue primarily comes from its Commercial Maintenance Business (MRO) segment, generating €4.45 billion, and the Commercial and Military Engine Business (OEM) segment, contributing €1.32 billion.

Estimated Discount To Fair Value: 48.8%

MTU Aero Engines is trading at €289.6, significantly below its estimated fair value of €565.82, highlighting potential undervaluation based on discounted cash flow analysis. The company reported half-year sales of €3.39 billion and net income of €285 million, showing year-on-year growth. Recent fixed-income offerings totaling approximately €745.88 million may enhance liquidity but also increase debt levels. Earnings are forecast to grow 35.27% annually over the next three years, outpacing market averages.

• In light of our recent growth report, it seems possible that MTU Aero Engines' financial performance will exceed current levels.
• Click here to discover the nuances of MTU Aero Engines with our detailed financial health report.

SAP (XTRA:SAP)

Overview: SAP SE, along with its subsidiaries, offers applications, technology, and services globally and has a market capitalization of approximately €246.11 billion.

Operations: The company's revenue segment for Applications, Technology & Services amounts to €32.54 billion.

Estimated Discount To Fair Value: 23%

SAP is trading at €211.55, well below its estimated fair value of €274.89, suggesting potential undervaluation based on cash flow analysis. Earnings are projected to grow 37.9% annually over the next three years, surpassing German market averages. Recent AI innovations unveiled by SAP aim to enhance business productivity and streamline processes, potentially impacting future cash flows positively despite current low return on equity forecasts and slower revenue growth compared to earnings projections.

• The growth report we've compiled suggests that SAP's future prospects could be on the up.
• Dive into the specifics of SAP here with our thorough financial health report.

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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.

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