Now to the matter at hand.
The verdict is to Reduce as the share price has reached neutrality.
Inderes: 5.5 (Accumulate) → 5.8 EUR & Reduce.
Risk/reward ratio is balanced
Relative to the historical through-the-cycle earnings level, the stock’s current valuation stands at a P/E ratio of approximately 11x and an EV/EBIT ratio of 8-9x. We consider these valuation multiples to be relatively neutral, as the through-the-cycle earnings level is clearly higher than the current earnings performance. The expectations baked into the current share price are also reflected in the fact that the stock’s pricing offers only a low free cash flow yield of approximately 5% relative to the realized average free cash flow of the past ten years. Thus, in our view, the current valuation already reflects expectations of structurally improved earnings power, which we consider justified given the changed market fundamentals. Overall, we find the stock’s valuation justified, the forecast risks balanced, and thus the risk/reward ratio neutral.