Is Wallenius Wilhelmsen ASA (OB:WAWI) Potentially Undervalued?

Wallenius Wilhelmsen ASA (OB:WAWI), might not be a large cap stock, but it saw significant share price movement during recent months on the OB, rising to highs of kr101 and falling to the lows of kr77.30. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Wallenius Wilhelmsen's current trading price of kr77.55 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Wallenius Wilhelmsen’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Wallenius Wilhelmsen

What Is Wallenius Wilhelmsen Worth?

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 4.6x is trading slightly below its industry peers’ ratio of 4.98x, which means if you buy Wallenius Wilhelmsen today, you’d be paying a decent price for it. And if you believe that Wallenius Wilhelmsen should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that Wallenius Wilhelmsen’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Wallenius Wilhelmsen?

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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Wallenius Wilhelmsen, at least in the near future.

What This Means For You

Are you a shareholder? Currently, WAWI appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on WAWI, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on WAWI 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 WAWI should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Wallenius Wilhelmsen, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for Wallenius Wilhelmsen (1 is a bit unpleasant) you should be familiar with.

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.