Boilermech Holdings Berhad (KLSE:BOILERM), is not the largest company out there, but it received a lot of attention from a substantial price increase on the KLSE over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Boilermech Holdings Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Boilermech Holdings Berhad

Is Boilermech Holdings Berhad Still Cheap?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’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 29.1x is currently well-above the industry average of 15.67x, meaning that it is trading at a more expensive price relative to its peers. Furthermore, Boilermech Holdings Berhad’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of Boilermech Holdings 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. With profit expected to grow by 73% over the next couple of years, the future seems bright for Boilermech Holdings 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? It seems like the market has well and truly priced in BOILERM’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe BOILERM should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.