Why Emaar Development PJSC (DFM:EMAARDEV) Could Be Worth Watching

While Emaar Development PJSC (DFM:EMAARDEV) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the DFM over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Emaar Development PJSC’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Emaar Development PJSC

Is Emaar Development PJSC still cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio 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 6.88x is currently trading slightly below its industry peers’ ratio of 10.51x, which means if you buy Emaar Development PJSC today, you’d be paying a reasonable price for it. And if you believe that Emaar Development PJSC should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Emaar Development PJSC’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

Can we expect growth from Emaar Development PJSC?

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. 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 65% over the next couple of years, the future seems bright 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? EMAARDEV’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 track record of its management team. 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 want to dive deeper into Emaar Development PJSC, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Emaar Development PJSC you should be aware of.

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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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