Is Logan Group Company Limited (HKG:3380) Potentially Undervalued?

By
Simply Wall St
Published
May 09, 2022
SEHK:3380
Source: Shutterstock

While Logan Group Company Limited (HKG:3380) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the SEHK over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Logan Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Logan Group

Is Logan Group still cheap?

Good news, investors! Logan Group is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 Logan Group’s ratio of 1.08x is below its peer average of 6.78x, which indicates the stock is trading at a lower price compared to the Real Estate industry. What’s more interesting is that, Logan Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Logan Group generate?

earnings-and-revenue-growth
SEHK:3380 Earnings and Revenue Growth May 9th 2022

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. Though in the case of Logan Group, it is expected to deliver a relatively unexciting earnings growth of 4.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since 3380 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 3380 for a while, now might be the time to enter the stock. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 3380. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Logan Group, you'd also look into what risks it is currently facing. Our analysis shows 5 warning signs for Logan Group (1 is a bit unpleasant!) and we strongly recommend you look at them before investing.

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

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