Is It Too Late To Consider Buying Bawan Company (TADAWUL:1302)?

Bawan Company (TADAWUL:1302), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SASE over the last few months, increasing to ر.س49.70 at one point, and dropping to the lows of ر.س37.55. 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 Bawan's current trading price of ر.س37.55 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bawan’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Bawan

Is Bawan Still Cheap?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Bawan’s ratio of 17.9x is trading slightly below its industry peers’ ratio of 18.16x, which means if you buy Bawan today, you’d be paying a decent price for it. And if you believe Bawan 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 Bawan’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.

Can we expect growth from Bawan?

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 a relatively muted profit growth of 5.6% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Bawan, at least in the short term.

What This Means For You

Are you a shareholder? 1302’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 1302? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on 1302, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean 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 Bawan, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Bawan has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in Bawan, 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.