Is There Now An Opportunity In Prestige Estates Projects Limited (NSE:PRESTIGE)?

While Prestige Estates Projects Limited (NSE:PRESTIGE) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. 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? Today I will analyse the most recent data on Prestige Estates Projects’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Prestige Estates Projects

What's the opportunity in Prestige Estates Projects?

Good news, investors! Prestige Estates Projects 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 Prestige Estates Projects’s ratio of 8.16x is below its peer average of 26.09x, which indicates the stock is trading at a lower price compared to the Real Estate industry. Another thing to keep in mind is that Prestige Estates Projects’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Prestige Estates Projects 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. 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. 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 Prestige Estates Projects, at least in the near future.

What this means for you:

Are you a shareholder? Although PRESTIGE is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to PRESTIGE, 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 PRESTIGE for some time, but hesitant on making the leap, I 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'd like to know more about Prestige Estates Projects as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 4 warning signs for Prestige Estates Projects (of which 2 are potentially serious!) you should know about.

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This article by Simply Wall St is general in nature. 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.
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