Should You Investigate Westshore Terminals Investment Corporation (TSE:WTE) At CA$35.93?

By
Simply Wall St
Published
May 14, 2022
TSX:WTE
Source: Shutterstock

Westshore Terminals Investment Corporation (TSE:WTE), is not the largest company out there, but it received a lot of attention from a substantial price increase on the TSX 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. However, what if the stock is still a bargain? Today I will analyse the most recent data on Westshore Terminals Investment’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Westshore Terminals Investment

What is Westshore Terminals Investment worth?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 21.85x is currently well-above the industry average of 8.51x, meaning that it is trading at a more expensive price relative to its peers. Furthermore, Westshore Terminals Investment’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of Westshore Terminals Investment look like?

earnings-and-revenue-growth
TSX:WTE Earnings and Revenue Growth May 14th 2022

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Westshore Terminals Investment, at least in the near future.

What this means for you:

Are you a shareholder? If you believe WTE is currently trading above its peers, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. 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 an eye on WTE for a while, now may not be the best time to enter into the stock. The price has climbed past its industry peers, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 3 warning signs for Westshore Terminals Investment (1 is a bit concerning!) that we believe deserve your full attention.

If you are no longer interested in Westshore Terminals Investment, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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