Today we're going to take a look at the well-established WSP Global Inc. (TSE:WSP). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the TSX. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the companyâs outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Letâs examine WSP Globalâs valuation and outlook in more detail to determine if thereâs still a bargain opportunity.
See our latest analysis for WSP Global
What's The Opportunity In WSP Global?
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. Iâve used the price-to-earnings ratio in this instance because thereâs not enough visibility to forecast its cash flows. The stockâs ratio of 42.3x is currently trading in-line with its industry peersâ ratio, which means if you buy WSP Global today, youâd be paying a relatively sensible price for it. In addition to this, it seems like WSP Globalâs share price is quite stable, which could mean there may be less chances to buy low in the future now that itâs trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will WSP Global 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 itâs 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. WSP Global's earnings over the next few years are expected to increase by 68%, 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? WSPâs 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 havenât considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at WSP? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If youâve been keeping an eye on WSP, 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 WSP, which means itâs worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that WSP Global has 1 warning sign and it would be unwise to ignore this.
If you are no longer interested in WSP Global, you can use our free platform to see our 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
About TSX:WSP
WSP Global
Operates as a professional services consulting firm in the United States, Canada, the United Kingdom, Sweden, Australia, and internationally.
Adequate balance sheet with moderate growth potential.