The EUR 26 support area, currently tested, might facilitate a technical rebound. The company’s fundamentals could validate this scenario.

From a fundamental viewpoint, RWE is undervalued in terms of enterprise value. Based on the current price, its market capitalization, plus its net debt, represents 0.64 times its revenues. This valuation correspond to 6.73 and 7.6 times the two next fiscal years.

Technically, the security fell sharply for several weeks. This fall has lead RWE towards the EUR 26 support area, which could become useful as a stepping stone for a technical rebound. The target of this bullish trend is the EUR 27.85 resistance. Even though moving averages are still in a bearish trend, the double bottom pattern could help for the rebound.

So as to make the most of a potential technical rebound of RWE, it seems opportune to take a long position at the current price. A confirmation of this pattern would enable the security to reach the EUR 27.85. Investors should not insist under EUR 26 and are better off placing a stop loss order under this threshold.