Should You Think About Buying Sarine Technologies Ltd. (SGX:U77) Now?
Sarine Technologies Ltd. (SGX:U77), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SGX over the last few months, increasing to S$0.42 at one point, and dropping to the lows of S$0.28. 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 Sarine Technologies' current trading price of S$0.29 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 Sarine Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Sarine Technologies
What's The Opportunity In Sarine Technologies?
Sarine Technologies is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 23.18x is currently well-above the industry average of 9.97x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Sarine Technologies’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Sarine Technologies 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 Sarine Technologies, it is expected to deliver a negative earnings growth of -8.3%, 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? If you believe U77 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. 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 U77 for a while, now may not be the best time to enter into the stock. Its price has risen beyond its industry peers, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
So while earnings quality is important, it's equally important to consider the risks facing Sarine Technologies at this point in time. Be aware that Sarine Technologies is showing 3 warning signs in our investment analysis and 1 of those can't be ignored...
If you are no longer interested in Sarine Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
