Is Saudi Industrial Investment Group (TADAWUL:2250) Potentially Undervalued?

Saudi Industrial Investment Group (TADAWUL:2250), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the SASE over the last few months. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Saudi Industrial Investment Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Saudi Industrial Investment Group

What is Saudi Industrial Investment Group worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.5% below my intrinsic value, which means if you buy Saudi Industrial Investment Group today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth SAR29.49, then there’s not much of an upside to gain from mispricing. In addition to this, Saudi Industrial Investment Group has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Saudi Industrial Investment Group look like?

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. Though in the case of Saudi Industrial Investment Group, it is expected to deliver a relatively unexciting top-line growth of 6.7% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 2250’s future outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 2250, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

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. While conducting our analysis, we found that Saudi Industrial Investment Group has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Saudi Industrial Investment Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you’re looking to trade Saudi Industrial Investment Group, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.