When Should You Buy Hyundai Engineering & Construction Co., Ltd. (KRX:000720)?

Hyundai Engineering & Construction Co., Ltd. (KRX:000720), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the KOSE. With many analysts covering the mid-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? Let’s take a look at Hyundai Engineering & Construction’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Hyundai Engineering & Construction

What's the opportunity in Hyundai Engineering & Construction?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’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 19.54x is currently well-above the industry average of 11.1x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Hyundai Engineering & Construction’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Hyundai Engineering & Construction 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. Hyundai Engineering & Construction's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? A000720’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe A000720 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on A000720 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for A000720, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Hyundai Engineering & Construction as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Hyundai Engineering & Construction and you'll want to know about them.

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

If you decide to trade Hyundai Engineering & Construction, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.