Is It Too Late To Consider Buying A.P. Møller - Mærsk A/S (CPH:MAERSK B)?

A.P. Møller - Mærsk A/S (CPH:MAERSK B) saw a double-digit share price rise of over 10% in the past couple of months on the CPSE. With many analysts covering the large-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? Today I will analyse the most recent data on A.P. Møller - Mærsk’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for A.P. Møller - Mærsk

What's the opportunity in A.P. Møller - Mærsk?

Great news for investors – A.P. Møller - Mærsk is still trading at a fairly cheap price 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 2.1x is currently well-below the industry average of 8.05x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, A.P. Møller - Mærsk’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

What kind of growth will A.P. Møller - Mærsk generate?

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. 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. 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 A.P. Møller - Mærsk, at least in the near future.

What this means for you:

Are you a shareholder? Although MAERSK B is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to MAERSK B, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on MAERSK B for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into A.P. Møller - Mærsk, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with A.P. Møller - Mærsk (including 1 which shouldn't be ignored).

If you are no longer interested in A.P. Møller - Mærsk, 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.