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Westshore Terminals Investment Corporation (TSE:WTE), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$20.60 and falling to the lows of CA$18.17. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Westshore Terminals Investment's current trading price of CA$18.53 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Westshore Terminals Investment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Westshore Terminals Investment worth?
Good news, investors! Westshore Terminals Investment is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Westshore Terminals Investment’s ratio of 9.32x is below its peer average of 14.9x, which indicates the stock is trading at a lower price compared to the Infrastructure industry. Another thing to keep in mind is that Westshore Terminals Investment’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will Westshore Terminals Investment generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Westshore Terminals Investment, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although WTE is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to WTE, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on WTE for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you want to dive deeper into Westshore Terminals Investment, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Westshore Terminals Investment (1 is potentially serious) you should be familiar with.
If you are no longer interested in Westshore Terminals Investment, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. 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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