Is It Too Late To Consider Buying COSCO SHIPPING Holdings Co., Ltd. (HKG:1919)?

Today we're going to take a look at the well-established COSCO SHIPPING Holdings Co., Ltd. (HKG:1919). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on COSCO SHIPPING Holdings’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for COSCO SHIPPING Holdings

What's The Opportunity In COSCO SHIPPING Holdings?

According to our 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, 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 COSCO SHIPPING Holdings’s ratio of 6.54x is trading slightly below its industry peers’ ratio of 7.83x, which means if you buy COSCO SHIPPING Holdings today, you’d be paying a decent price for it. And if you believe COSCO SHIPPING Holdings should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that COSCO SHIPPING Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will COSCO SHIPPING Holdings generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of COSCO SHIPPING Holdings, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, 1919 appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on 1919, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 1919 for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on 1919 should the price fluctuate below the industry PE ratio.

If you want to dive deeper into COSCO SHIPPING Holdings, you'd also look into what risks it is currently facing. Our analysis shows 3 warning signs for COSCO SHIPPING Holdings (1 is potentially serious!) and we strongly recommend you look at these before investing.

If you are no longer interested in COSCO SHIPPING 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.