Sino-Global Shipping America Ltd (NASDAQ:SINO), a USD$30.32M small-cap, is a transportation infrastructure company operating in an industry which faces the challenge of government-funding availability, opening opportunities for the private sector to provision for public infrastructure. Transport analysts are forecasting for the whole industry, a somewhat weaker growth of 4.91% in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, and also determine whether SINO is a laggard or leader relative to its transportation sector peers. View our latest analysis for Sino-Global Shipping America
What’s the catalyst for SINO’s sector growth?
Recently, investment in technology is seen as a necessity in order to support inter-modality as transport networks get more complex and crowded. This disruption in the transportation industry increases the demand for improved infrastructure nationally. Over the past year, the industry saw growth in the thirties, beating the US market growth of 10.30%. Given the lack of analyst consensus in SINO’s outlook, we could potentially assume the stock’s growth rate broadly follows its transportation infrastructure industry peers. This means it is an attractive growth stock relative to the wider US stock market.
Is SINO and the sector relatively cheap?
Transportation infrastructure companies are typically trading at a PE of 21x, relatively similar to the rest of the US stock market PE of 22x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 22.62% compared to the market’s 10.06%, potentially illustrative of past tailwinds. On the stock-level, SINO is trading at a lower PE ratio of 7x, making it cheaper than the average transportation infrastructure stock. In terms of returns, SINO generated 33.76% in the past year, which is 11.15% over the transportation infrastructure sector.
What this means for you:
Are you a shareholder? Transportation infrastructure stocks are currently expected to grow slower than the average stock on the index. This means if you’re overweight in this sector, your portfolio will be tilted towards lower-growth. If growth was one of your main investment catalyst in the sector, now would be the time to revisit your holdings in SINO. Keep in mind the sector is trading relatively in-line with the rest of the market, which may mean you’ll be selling out at a reasonable price.
Are you a potential investor? The transportation sector’s below-market growth and average valuation hardly makes it an exciting investment case. If you’re looking for a high-growth stock with potential mispricing, it seems like transportation infrastructure companies like SINO isn’t the right place to look. However, if you’re interested in the stock for other reasons, I suggest you research more into the company’s cash flow as well as its financial health in order to gain a holistic view of the stock.
For a deeper dive into Sino-Global Shipping America’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other transportation stocks instead? Use our free playform to see my list of over 100 other transportation companies trading on the market.
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.