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Unisem (M) Berhad (KLSE:UNISEM), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the KLSE over the last few months, increasing to RM3.27 at one point, and dropping to the lows of RM2.79. 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 Unisem (M) Berhad's current trading price of RM2.87 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 Unisem (M) 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 Unisem (M) Berhad
Is Unisem (M) Berhad Still Cheap?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Unisem (M) Berhad’s ratio of 23.76x is trading slightly below its industry peers’ ratio of 25.98x, which means if you buy Unisem (M) Berhad today, you’d be paying a decent price for it. And if you believe that Unisem (M) Berhad should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Unisem (M) Berhad’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Unisem (M) Berhad?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Unisem (M) Berhad's earnings over the next few years are expected to increase by 24%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in UNISEM’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 financial strength of the company. Have these factors changed since the last time you looked at UNISEM? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?