Should You Think About Buying Wilh. Wilhelmsen Holding ASA (OB:WWI) Now?

While Wilh. Wilhelmsen Holding ASA (OB:WWI) 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 small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Wilh. Wilhelmsen Holding’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Wilh. Wilhelmsen Holding

What's The Opportunity In Wilh. Wilhelmsen Holding?

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 Wilh. Wilhelmsen Holding’s ratio of 2.78x is trading slightly below its industry peers’ ratio of 4.76x, which means if you buy Wilh. Wilhelmsen Holding today, you’d be paying a decent price for it. And if you believe Wilh. Wilhelmsen Holding 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. In addition to this, it seems like Wilh. Wilhelmsen Holding’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Wilh. Wilhelmsen Holding generate?

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. Though in the case of Wilh. Wilhelmsen Holding, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, WWI 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 de-risk 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 WWI, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on WWI for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, 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 crystallize your views on WWI 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. You'd be interested to know, that we found 1 warning sign for Wilh. Wilhelmsen Holding and you'll want to know about this.

If you are no longer interested in Wilh. Wilhelmsen Holding, 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.