At kr194, Is It Time To Put Mowi ASA (OB:MOWI) On Your Watch List?

While Mowi ASA (OB:MOWI) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the OB. 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. But what if there is still an opportunity to buy? Let’s examine Mowi’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Mowi

Is Mowi 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 11.07x is currently trading slightly below its industry peers’ ratio of 15.04x, which means if you buy Mowi today, you’d be paying a decent price for it. And if you believe Mowi should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, Mowi’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Mowi?

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. However, with a negative profit growth of -0.06% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Mowi. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? MOWI seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on MOWI, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on MOWI for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on MOWI should the price fluctuate below the industry PE ratio.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, Mowi has 3 warning signs (and 1 which can't be ignored) we think you should know about.

If you are no longer interested in Mowi, 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.