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While Q & M Dental Group (Singapore) Limited (SGX:QC7) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the SGX. The recent share price gains has brought the company back closer to its yearly peak. 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 examine Q & M Dental Group (Singapore)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Q & M Dental Group (Singapore)
What's The Opportunity In Q & M Dental Group (Singapore)?
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. 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 Q & M Dental Group (Singapore)’s ratio of 16x is trading slightly below its industry peers’ ratio of 16.29x, which means if you buy Q & M Dental Group (Singapore) today, you’d be paying a decent price for it. And if you believe Q & M Dental Group (Singapore) should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like Q & M Dental Group (Singapore)’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 Q & M Dental Group (Singapore)?
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. With profit expected to grow by a double-digit 11% over the next couple of years, the outlook is positive for Q & M Dental Group (Singapore). 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 already priced in QC7’s positive outlook, 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 QC7? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?