Have Investors Already Priced In Galaxy Entertainment Group Limited’s (HKG:27) Growth?
Let’s talk about the popular Galaxy Entertainment Group Limited (SEHK:27). The company’s shares received a lot of attention from a substantial price increase on the SEHK over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Galaxy Entertainment Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for Galaxy Entertainment Group
What’s the opportunity in Galaxy Entertainment Group?
According to my valuation model, the stock is currently overvalued by about 78%, trading at HK$66.70 compared to my intrinsic value of HK$37.47. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Galaxy Entertainment Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Galaxy Entertainment Group look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 58.68% over the next couple of years, the future seems bright for Galaxy Entertainment Group. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? 27’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe 27 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on 27 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 27, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Galaxy Entertainment Group. You can find everything you need to know about Galaxy Entertainment Group in the latest infographic research report. If you are no longer interested in Galaxy Entertainment Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
