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Is It Too Late To Consider Buying Genting Singapore Limited (SGX:G13)?

Simply Wall St

Genting Singapore Limited (SGX:G13), which is in the hospitality business, and is based in Singapore, received a lot of attention from a substantial price movement on the SGX over the last few months, increasing to SGD1.11 at one point, and dropping to the lows of SGD0.96. 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 Genting Singapore's current trading price of SGD0.96 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 Genting Singapore’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Genting Singapore

What is Genting Singapore worth?

According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Genting Singapore’s ratio of 15.31x is trading slightly below its industry peers’ ratio of 20.3x, which means if you buy Genting Singapore today, you’d be paying a fair price for it. And if you believe that Genting Singapore should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Genting Singapore’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Genting Singapore?

SGX:G13 Past and Future Earnings, April 16th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted profit growth of 2.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Genting Singapore, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in G13’s growth 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 G13? Will you have enough conviction to buy should the price fluctuate below the true value?

Are you a potential investor? If you’ve been keeping tabs on G13, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean 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 Genting Singapore. You can find everything you need to know about Genting Singapore in the latest infographic research report. If you are no longer interested in Genting Singapore, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.