Great Eagle Holdings Limited (HKG:41), which is in the real estate business, and is based in Hong Kong, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$29.00 at one point, and dropping to the lows of HK$25.60. 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 Great Eagle Holdings's current trading price of HK$26.10 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 Great Eagle Holdings’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 Great Eagle Holdings

What is Great Eagle Holdings worth?

The stock seems fairly valued at the moment according to my relative valuation model. 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 Great Eagle Holdings’s ratio of 4.07x is trading slightly below its industry peers’ ratio of 6.63x, which means if you buy Great Eagle Holdings today, you’d be paying a reasonable price for it. And if you believe Great Eagle Holdings should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Great Eagle Holdings’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.

What does the future of Great Eagle Holdings 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 an expected decline of -11% in revenues over the next year, short term growth isn’t a driver for a buy decision for Great Eagle Holdings. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? 41 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on 41, take a look at whether its fundamentals have changed.