While Evergreen Fibreboard Berhad (KLSE:EVERGRN) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the KLSE over the last few months, increasing to RM0.46 at one point, and dropping to the lows of RM0.35. 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 Evergreen Fibreboard Berhad's current trading price of RM0.39 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 Evergreen Fibreboard Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Evergreen Fibreboard Berhad
Is Evergreen Fibreboard 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 Evergreen Fibreboard Berhad’s ratio of 4.97x is trading slightly below its industry peers’ ratio of 7.83x, which means if you buy Evergreen Fibreboard Berhad today, you’d be paying a reasonable price for it. And if you believe that Evergreen Fibreboard 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. So, is there another chance to buy low in the future? Given that Evergreen Fibreboard Berhad’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Evergreen Fibreboard 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. However, with a negative profit growth of -2.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Evergreen Fibreboard Berhad. This certainty tips the risk-return scale towards higher risk.