Stock Analysis

When Should You Buy 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 RM3.90 and falling to the lows of RM3.10. 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 RM3.26 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.

Check out our latest analysis for Gamuda Berhad

What's the opportunity in Gamuda Berhad?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.52% above my intrinsic value, which means if you buy Gamuda Berhad today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth MYR3.03, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Gamuda Berhad has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Gamuda Berhad?

earnings-and-revenue-growth
KLSE:GAMUDA Earnings and Revenue Growth May 30th 2021

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. Gamuda Berhad'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? It seems like the market has already priced in GAMUDA’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 3 warning signs for Gamuda Berhad you should be mindful of and 1 of these is a bit unpleasant.

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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Valuation is complex, but we're helping make it simple.

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. 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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