Stock Analysis

Is Now The Time To Look At Buying Gamuda Berhad (KLSE:GAMUDA)?

KLSE:GAMUDA
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While Gamuda Berhad (KLSE:GAMUDA) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KLSE, rising to highs of RM3.32 and falling to the lows of RM2.81. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Gamuda Berhad's current trading price of RM2.86 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Gamuda Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Gamuda Berhad

Is Gamuda Berhad still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.40% above my intrinsic value, which means if you buy Gamuda Berhad today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth MYR2.82, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Gamuda Berhad’s low beta implies that the stock is less volatile than the wider market.

What does the future of Gamuda Berhad look like?

earnings-and-revenue-growth
KLSE:GAMUDA Earnings and Revenue Growth January 5th 2022

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. However, with a relatively muted profit growth of 1.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Gamuda Berhad, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in GAMUDA’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on GAMUDA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for Gamuda Berhad and we think they deserve your attention.

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

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Find out whether Gamuda Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.