I-Berhad (KLSE:IBHD), is not the largest company out there, but it received a lot of attention from a substantial price movement on the KLSE over the last few months, increasing to RM0.24 at one point, and dropping to the lows of RM0.22. 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 I-Berhad's current trading price of RM0.23 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 I-Berhad’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 I-Berhad
What Is I-Berhad Worth?
I-Berhad appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and 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 16.15x is currently well-above the industry average of 10.8x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that I-Berhad’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.
What does the future of I-Berhad 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. 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 revenue growth of 4.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for I-Berhad, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in IBHD’s outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe IBHD 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. But before you make this decision, take a look at whether its fundamentals have changed.