Should You Investigate Axiata Group Berhad (KLSE:AXIATA) At RM2.60?

Axiata Group Berhad (KLSE:AXIATA), is not the largest company out there, but it saw a decent share price growth in the teens level on the KLSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Axiata Group Berhad’s outlook and valuation to see if the opportunity still exists.

Check out the opportunities and risks within the MY Wireless Telecom industry.

What Is Axiata Group Berhad Worth?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Axiata Group Berhad’s ratio of 75.47x is above its peer average of 20.03x, which suggests the stock is trading at a higher price compared to the Wireless Telecom industry. In addition to this, it seems like Axiata Group Berhad’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Axiata Group Berhad look like?

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. With profit expected to more than double over the next couple of years, the future seems bright for Axiata 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? It seems like the market has well and truly priced in AXIATA’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe AXIATA 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 AXIATA 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 AXIATA, 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 Axiata Group Berhad, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with Axiata Group Berhad (including 1 which can't be ignored).

If you are no longer interested in Axiata 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.