At HK$53.00, Is It Time To Put CK Hutchison Holdings Limited (HKG:1) On Your Watch List?

CK Hutchison Holdings Limited (HKG:1) saw significant share price movement during recent months on the SEHK, rising to highs of HK$58.75 and falling to the lows of HK$52.45. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CK Hutchison Holdings' current trading price of HK$53.00 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CK Hutchison Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for CK Hutchison Holdings

What is CK Hutchison Holdings worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 CK Hutchison Holdings’s ratio of 6.07x is trading slightly above its industry peers’ ratio of 5.64x, which means if you buy CK Hutchison Holdings today, you’d be paying a relatively reasonable price for it. And if you believe CK Hutchison Holdings should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since CK Hutchison Holdings’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.

What kind of growth will CK Hutchison Holdings generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 profit growth of 8.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for CK Hutchison Holdings, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 1’s growth outlook, 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 1? 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 1, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing CK Hutchison Holdings at this point in time. You'd be interested to know, that we found 2 warning signs for CK Hutchison Holdings and you'll want to know about them.

If you are no longer interested in CK Hutchison Holdings, 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.