Why Emaar Properties PJSC (DFM:EMAAR) Could Be Worth Watching

While Emaar Properties PJSC (DFM:EMAAR) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the DFM, rising to highs of د.إ4.17 and falling to the lows of د.إ3.45. 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 Emaar Properties PJSC's current trading price of د.إ3.60 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Emaar Properties PJSC’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 Emaar Properties PJSC

What is Emaar Properties PJSC worth?

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 Emaar Properties PJSC’s ratio of 9.85x is trading in-line with its industry peers’ ratio, which means if you buy Emaar Properties PJSC today, you’d be paying a relatively reasonable price for it. So, is there another chance to buy low in the future? Given that Emaar Properties PJSC’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 kind of growth will Emaar Properties PJSC generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Emaar Properties PJSC's earnings over the next few years are expected to increase by 53%, 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 already priced in EMAAR’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at EMAAR? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on EMAAR, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for EMAAR, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Emaar Properties PJSC at this point in time. Every company has risks, and we've spotted 2 warning signs for Emaar Properties PJSC you should know about.

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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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