Pingtan Marine Enterprise Ltd (NASDAQ:PME), a food company based in China, saw a significant share price rise of over 20% in the past couple of months on the NasdaqCM. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Pingtan Marine Enterprise’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Pingtan Marine Enterprise
What’s the opportunity in Pingtan Marine Enterprise?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.38x is currently trading slightly below its industry peers’ ratio of 19.02x, which means if you buy Pingtan Marine Enterprise today, you’d be paying a fair price for it. And if you believe Pingtan Marine Enterprise should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Pingtan Marine Enterprise’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Pingtan Marine Enterprise 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. 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. With revenue expected to more than double in the next few years, the future appears to be extremely bright for Pingtan Marine Enterprise. If expenses can also be maintained, 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? It seems like the market has already priced in PME’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at PME? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on PME, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for PME, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 Pingtan Marine Enterprise. You can find everything you need to know about Pingtan Marine Enterprise in the latest infographic research report. If you are no longer interested in Pingtan Marine Enterprise, 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.