At RM1.09, Is Eco World Development Group Berhad (KLSE:ECOWLD) Worth Looking At Closely?

Eco World Development Group Berhad (KLSE:ECOWLD), is not the largest company out there, but it saw a significant share price rise of over 20% 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 Eco World Development Group Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Eco World Development Group Berhad

Is Eco World Development Group Berhad Still Cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to 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 19.12x is currently trading slightly above its industry peers’ ratio of 14.36x, which means if you buy Eco World Development Group Berhad today, you’d be paying a relatively reasonable price for it. And if you believe Eco World Development Group Berhad should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like Eco World Development Group Berhad’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Eco World Development Group Berhad generate?

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. With profit expected to grow by 66% over the next couple of years, the future seems bright for Eco World Development Group Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? ECOWLD’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 ECOWLD? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on ECOWLD, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for ECOWLD, 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 while earnings quality is important, it's equally important to consider the risks facing Eco World Development Group Berhad at this point in time. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Eco World Development Group Berhad.

If you are no longer interested in Eco World Development Group 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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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.