Is There Now An Opportunity In Polaris Infrastructure Inc. (TSE:PIF)?

Polaris Infrastructure Inc. (TSE:PIF), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. 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. But what if there is still an opportunity to buy? Let’s examine Polaris Infrastructure’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Polaris Infrastructure

What is Polaris Infrastructure worth?

Good news, investors! Polaris Infrastructure is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 Polaris Infrastructure’s ratio of 8.73x is below its peer average of 19.17x, which indicates the stock is trading at a lower price compared to the Renewable Energy industry. However, given that Polaris Infrastructure’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Polaris Infrastructure?

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 a relatively muted revenue growth of 4.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Polaris Infrastructure, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since PIF is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on PIF for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PIF. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you want to dive deeper into Polaris Infrastructure, you'd also look into what risks it is currently facing. For example, Polaris Infrastructure has 4 warning signs (and 1 which shouldn't be ignored) we think 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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