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While Seatrium Limited (SGX:5E2) might not have the largest market cap around , it saw a decent share price growth of 16% on the SGX over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Seatrium’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Seatrium
What Is Seatrium Worth?
Good news, investors! Seatrium is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is SGD3.01, but it is currently trading at S$1.91 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Seatrium’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Seatrium 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. With revenues expected to grow by a double-digit 20% over the next couple of years, the outlook is positive for Seatrium. If the level of expenses is able to be maintained, 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? Since 5E2 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on 5E2 for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 5E2. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.