Should You Investigate BOC Aviation Limited (HKG:2588) At HK$60.75?

While BOC Aviation Limited (HKG:2588) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$65.70 at one point, and dropping to the lows of HK$58.00. 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 BOC Aviation's current trading price of HK$60.75 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BOC Aviation’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for BOC Aviation

Is BOC Aviation Still Cheap?

Great news for investors – BOC Aviation is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 5.63x is currently well-below the industry average of 9.71x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, BOC Aviation’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 does the future of BOC Aviation look like?

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 negative profit growth of -14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for BOC Aviation. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although 2588 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to 2588, 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 2588 for some time, but hesitant on making the leap, we 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 BOC Aviation, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 4 warning signs for BOC Aviation (of which 2 can't be ignored!) you should know about.

If you are no longer interested in BOC Aviation, 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.