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While Genco Shipping & Trading Limited (NYSE:GNK) might not have the largest market cap around , it saw a decent share price growth of 11% on the NYSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Genco Shipping & Trading’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Genco Shipping & Trading
What Is Genco Shipping & Trading Worth?
Genco Shipping & Trading appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Genco Shipping & Trading’s ratio of 51.12x is above its peer average of 6x, which suggests the stock is trading at a higher price compared to the Shipping industry. Furthermore, Genco Shipping & Trading’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Genco Shipping & Trading?
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 more than double over the next couple of years, the future seems bright for Genco Shipping & Trading. 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? It seems like the market has well and truly priced in GNK’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe GNK 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.