United U-LI Corporation Berhad (KLSE:ULICORP), might not be a large cap stock, but it saw a decent share price growth of 11% on the KLSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at United U-LI Corporation Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for United U-LI Corporation Berhad

Is United U-LI Corporation Berhad Still Cheap?

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 United U-LI Corporation Berhad’s ratio of 7.75x is trading slightly below its industry peers’ ratio of 9.16x, which means if you buy United U-LI Corporation Berhad today, you’d be paying a decent price for it. And if you believe United U-LI Corporation Berhad 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. Although, there may be an opportunity to buy in the future. This is because United U-LI Corporation Berhad’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of United U-LI Corporation Berhad look like?

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. With profit expected to grow by 57% over the next couple of years, the future seems bright for United U-LI Corporation Berhad. 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? ULICORP’s optimistic future growth appears to have been factored into the current share price, 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 ULICORP? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?