Is There Now An Opportunity In Wallenius Wilhelmsen ASA (OB:WAWI)?

Wallenius Wilhelmsen ASA (OB:WAWI), might not be a large cap stock, but it saw a significant share price rise of over 20% 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. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Wallenius Wilhelmsen’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Wallenius Wilhelmsen

Is Wallenius Wilhelmsen Still Cheap?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Wallenius Wilhelmsen’s ratio of 7.27x is trading slightly above its industry peers’ ratio of 5.94x, which means if you buy Wallenius Wilhelmsen today, you’d be paying a relatively sensible price for it. And if you believe Wallenius Wilhelmsen 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. Although, there may be an opportunity to buy in the future. This is because Wallenius Wilhelmsen’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Wallenius Wilhelmsen generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 46% over the next couple of years, the future seems bright for Wallenius Wilhelmsen. 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 already priced in WAWI’s positive outlook, 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 WAWI? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on WAWI, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for WAWI, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Wallenius Wilhelmsen, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Wallenius Wilhelmsen you should be aware of.

If you are no longer interested in Wallenius Wilhelmsen, 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.