Market Turbulence Creates Buying Opportunities: Three European Stocks Trading at a Discount
European equity markets have been navigating a period of heightened uncertainty, with the STOXX Europe 600, France's CAC 40, and Germany's DAX all feeling the pressure from shifting trade dynamics and geopolitical friction. Yet, beneath the surface volatility, business activity in the eurozone shows signs of underlying resilience, with many firms expressing cautious optimism for the quarters ahead. For value-oriented investors, this environment may present a window to identify fundamentally sound companies trading below their intrinsic worth.
Electrolux Professional AB (OM:EPRO B)
With a market capitalisation of SEK 17.93 billion, Electrolux Professional is a key supplier to the global hospitality and institutional sectors. The company, which splits its revenue between Food & Beverage (SEK 7.46bn) and Laundry (SEK 4.96bn) solutions, is currently trading at SEK 62.4. Our analysis, based on discounted cash flow models, suggests a fair value closer to SEK 90.6—a potential discount of approximately 31%. While recent sales figures have softened, earnings are forecast to grow at an impressive 33.7% per year, significantly outpacing the Swedish market average. Its strategic push towards energy-efficient and sustainable products positions it well within evolving regulatory frameworks.
RVRC Holding AB (OM:RVRC)
This e-commerce retailer, specialising in outdoor apparel and active across Germany and Sweden, commands a market cap of SEK 7.30 billion. Generating SEK 1.97 billion in revenue, its shares trade at SEK 69. Our valuation model estimates a fair value of SEK 88.73, implying a 22% discount. Despite some insider selling activity noted recently, the company's fundamentals appear robust. RVRC has reported year-on-year growth in both revenue and net income, with earnings per share on the rise. Analyst projections point to annual earnings growth of 12.2%, a healthy clip above the market expectation.
Rheinmetall AG (XTRA:RHM)
The German defence and automotive giant, valued at €82.86 billion, presents a striking case. Trading at €1,795.5, our cash flow analysis indicates a fair value estimate of €3,294.94—a discount of over 45%. Revenue is diversified across Vehicle Systems (€4.49bn), Weapon and Ammunition (€3.24bn), Electronic Solutions (€2.15bn), and Power Systems (€1.95bn). The company is riding a wave of increased defence spending across Europe; a recent €1.7 billion contract with the German Armed Forces for space-based reconnaissance data underscores its strategic role. Earnings are projected to surge by 30.8% annually, far exceeding the growth rate anticipated for the German market.
Investor Perspectives:
"In choppy markets, disciplined valuation work is key," says Klara Schmidt, a portfolio manager at Horizon Capital in Frankfurt. "Companies like Rheinmetall, with visible long-term order books and pricing power, can be compelling when the market prices them below their cash-generating potential."
Marco Ferrara, an independent analyst based in Milan, offers a more cautious take: "While the discounts seem attractive, one must question the sustainability of growth rates, especially for cyclical industrials. A broader economic slowdown could quickly erode these cash flow projections."
Striking a sharper tone, Elin Ødegård, a retail investor and frequent market commentator from Oslo, remarked: "This feels like another attempt to talk up stocks in a falling market. 'Undervalued' is a relative term. If the macro picture worsens, these so-called discounts could vanish, and investors might be catching a falling knife."
Disclaimer: This analysis, based on historical data and analyst forecasts using a fundamental methodology, is for informational purposes only. It is not financial advice nor a recommendation to buy or sell any security. It does not consider your individual objectives or financial situation. Our long-term focused analysis may not incorporate the latest company-specific announcements. The author and publisher have no position in the securities mentioned.