Hume Cement Industries Berhad (KLSE:HUMEIND), 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 RM3.19 at one point, and dropping to the lows of RM2.47. 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 Hume Cement Industries Berhad's current trading price of RM2.66 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 Hume Cement Industries Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Hume Cement Industries Berhad Worth?
According to our 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. We’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 8.28x is currently trading slightly below its industry peers’ ratio of 10.12x, which means if you buy Hume Cement Industries Berhad today, you’d be paying a reasonable price for it. And if you believe that Hume Cement Industries 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. In addition to this, it seems like Hume Cement Industries Berhad’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.
View our latest analysis for Hume Cement Industries Berhad
What does the future of Hume Cement Industries 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. Though in the case of Hume Cement Industries Berhad, it is expected to deliver a relatively unexciting earnings growth of 6.6%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.