Is There Now An Opportunity In Wharf Real Estate Investment Company Limited (HKG:1997)?

Today we're going to take a look at the well-established Wharf Real Estate Investment Company Limited (HKG:1997). The company's stock saw a decent share price growth in the teens level on the SEHK over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Wharf Real Estate Investment’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Wharf Real Estate Investment

Is Wharf Real Estate Investment still cheap?

Good news, investors! Wharf Real Estate Investment is still a bargain right now. According to my valuation, the intrinsic value for the stock is HK$52.22, but it is currently trading at HK$36.70 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Wharf Real Estate Investment’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Wharf Real Estate Investment?

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. Wharf Real Estate Investment's earnings over the next few years are expected to increase by 73%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since 1997 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 1997 for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1997. 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 buy.

So while earnings quality is important, it's equally important to consider the risks facing Wharf Real Estate Investment at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Wharf Real Estate Investment.

If you are no longer interested in Wharf Real Estate Investment, 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.