Is There Now An Opportunity In Century Plyboards (India) Limited (NSE:CENTURYPLY)?

Century Plyboards (India) Limited (NSE:CENTURYPLY), which is in the forestry business, and is based in India, received a lot of attention from a substantial price increase on the NSEI over the last few months. As a 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? Let’s examine Century Plyboards (India)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Century Plyboards (India)

What is Century Plyboards (India) worth?

Century Plyboards (India) is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. 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 23.49x is currently well-above the industry average of 7.81x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Century Plyboards (India)’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Century Plyboards (India) 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. Century Plyboards (India)’s earnings over the next few years are expected to increase by 61%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in CENTURYPLY’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 CENTURYPLY 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.

Are you a potential investor? If you’ve been keeping tabs on CENTURYPLY for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for CENTURYPLY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Century Plyboards (India). You can find everything you need to know about Century Plyboards (India) in the latest infographic research report. If you are no longer interested in Century Plyboards (India), you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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