Is Now An Opportune Moment To Examine Emaar Development PJSC (DFM:EMAARDEV)?

While Emaar Development PJSC (DFM:EMAARDEV) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the DFM over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Emaar Development PJSC’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Emaar Development PJSC

What's the opportunity in Emaar Development PJSC?

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. 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 8.3x is currently trading slightly below its industry peers’ ratio of 11.03x, which means if you buy Emaar Development PJSC today, you’d be paying a decent price for it. And if you believe Emaar Development PJSC 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. So, is there another chance to buy low in the future? Given that Emaar Development 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.

Can we expect growth from Emaar Development PJSC?

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. With profit expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Emaar Development PJSC. 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 already priced in EMAARDEV’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 financial strength of the company. Have these factors changed since the last time you looked at EMAARDEV? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on EMAARDEV, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for EMAARDEV, 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.

If you'd like to know more about Emaar Development PJSC as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Emaar Development PJSC (of which 1 is concerning!) 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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