At RM1.94, Is It Time To Put Sunway Construction Group Berhad (KLSE:SUNCON) On Your Watch List?

Sunway Construction Group Berhad (KLSE:SUNCON), 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 KLSE. 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. But what if there is still an opportunity to buy? Let’s take a look at Sunway Construction Group Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Sunway Construction Group Berhad

Is Sunway Construction Group Berhad still cheap?

Sunway Construction Group Berhad appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. 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 33.73x is currently well-above the industry average of 24.38x, meaning that it is trading at a more expensive price relative to its peers. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Sunway Construction Group Berhad’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 kind of growth will Sunway Construction Group Berhad generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Sunway Construction Group 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? SUNCON’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe SUNCON 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 tabs on SUNCON for some time, 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 optimistic prospect is encouraging for SUNCON, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Sunway Construction Group Berhad, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Sunway Construction Group Berhad 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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