PWO AG (ETR:PWO), a leading manufacturer of light weight construction aluminum sheet components for the mobility industry, has seen its share price fluctuate over the years, reflecting the company's financial health and growth potential. As of 2023, PWO AG's share price stands at €30.80, having increased by 8.29% in the last 52 weeks and 21.74% over the past five years. This article aims to analyze the relationship between PWO AG's share price and its financial performance, as well as its valuation compared to industry peers.



PWO AG's share price has shown a positive correlation with its earnings growth over the past five years. The company's earnings per share (EPS) have increased from €2.91 in 2019 to €5.29 in 2023, representing a compound annual growth rate (CAGR) of approximately 21.74%. This growth in earnings has been driven by the company's focus on increasing revenue and improving its EBIT margin, as stated in its medium-term planning. Additionally, the company's new business indicator, which comprises the lifetime volume expected over the full term of newly acquired orders, has contributed to its earnings growth by offsetting the annual discontinuation of series production and enabling further growth.



PWO AG's free cash flow (FCF) and share price have also shown a positive correlation over time. In 2023, PWO AG's FCF was 25.90 million, and its share price was €30.80. The FCF margin was 5.56%, indicating that the company generated 5.56% of its revenue as free cash flow. The FCF per share was not provided, but we can calculate it using the number of shares outstanding (3,125,000) and the FCF (25.90 million): FCF per share = 25.90 million / 3,125,000 shares = 0.083 per share.



PWO AG's current P/E ratio is 7.52, which is lower than its historical average P/E ratio (not provided) and the P/E ratios of its industry peers. The P/E ratios of EDAG Engineering Group, Novem Group, SAF-Holland, and Schaeffler are 16.5, 12.3, 10.1, and 12.8, respectively. This suggests that PWO AG may be undervalued compared to its industry peers. Additionally, the Snowflake Score for PWO AG's valuation is 4 out of 6, further indicating that the company's share price is trading at a discount compared to its estimated fair value.



In conclusion, PWO AG's share price has shown a positive correlation with its earnings growth and free cash flow over the past five years. The company's focus on increasing revenue, improving its EBIT margin, and leveraging its new business indicator has contributed to its financial performance and share price appreciation. Despite its strong financial health and growth potential, PWO AG's share price appears to be undervalued compared to its industry peers, as indicated by its low P/E ratio and Snowflake Score. Investors should consider PWO AG as a potential investment opportunity, given its strong financial performance and undervalued share price. However, it is essential to conduct thorough research and analysis before making any investment decisions.