Is It Too Late To Buy Sembcorp Industries Ltd (SGX:U96)?
Sembcorp Industries Ltd (SGX:U96), a industrials company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD3.57 and falling to the lows of SGD3.02. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Sembcorp Industries’s current trading price of SGD3.11 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sembcorp Industries’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Sembcorp Industries
What is Sembcorp Industries worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% above my intrinsic value, which means if you buy Sembcorp Industries today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth SGD2.81, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Sembcorp Industries’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 kind of growth will Sembcorp Industries 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. With profit expected to more than double over the next couple of years, the future seems bright for Sembcorp Industries. 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 U96’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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on U96, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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 Sembcorp Industries. You can find everything you need to know about Sembcorp Industries in the latest infographic research report. If you are no longer interested in Sembcorp Industries, 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.
