When Should You Buy Swire Pacific Limited (HKG:19)?

Swire Pacific Limited (HKG:19) received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$73.40 at one point, and dropping to the lows of HK$60.45. 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 Swire Pacific's current trading price of HK$64.05 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 Swire Pacific’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 Swire Pacific

What's The Opportunity In Swire Pacific?

Good news, investors! Swire Pacific is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Swire Pacific’s ratio of 3.13x is below its peer average of 4.94x, which indicates the stock is trading at a lower price compared to the Industrials industry. Swire Pacific’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 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.

Can we expect growth from Swire Pacific?

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 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 Swire Pacific, at least in the near future.

What This Means For You

Are you a shareholder? Although 19 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 19, 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 19 for some time, but hesitant on making the leap, we recommend you research further 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'd like to know more about Swire Pacific as a business, it's important to be aware of any risks it's facing. When we did our research, we found 4 warning signs for Swire Pacific (1 doesn't sit too well with us!) that we believe deserve your full attention.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.