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While UMS Integration Limited (SGX:558) might not have the largest market cap around , it saw significant share price movement during recent months on the SGX, rising to highs of S$1.07 and falling to the lows of S$0.97. 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 UMS Integration's current trading price of S$1.01 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 UMS Integration’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 UMS Integration
What's The Opportunity In UMS Integration?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 15.88x is currently trading slightly above its industry peers’ ratio of 13.37x, which means if you buy UMS Integration today, you’d be paying a relatively sensible price for it. And if you believe that UMS Integration should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like UMS Integration’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from UMS Integration?
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. 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. With profit expected to grow by 22% over the next couple of years, the future seems bright for UMS Integration. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? 558’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 558? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?