Is Now An Opportune Moment To Examine Daewoo Engineering & Construction Co., Ltd. (KRX:047040)?

Daewoo Engineering & Construction Co., Ltd. (KRX:047040), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the KOSE. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Daewoo Engineering & Construction’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Daewoo Engineering & Construction

What Is Daewoo Engineering & Construction Worth?

Great news for investors – Daewoo Engineering & Construction is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 3.26x is currently well-below the industry average of 9x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Daewoo Engineering & Construction’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Daewoo Engineering & Construction?

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 a negative profit growth of -12% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Daewoo Engineering & Construction. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although A047040 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to A047040, 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 an eye on A047040 for a while, but hesitant on making the leap, we recommend you research further 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 1 warning sign for Daewoo Engineering & Construction and you'll want to know about it.

If you are no longer interested in Daewoo Engineering & Construction, 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.

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