At ر.س17.48, Is Fawaz Abdulaziz Al Hokair & Company (TADAWUL:4240) Worth Looking At Closely?

While Fawaz Abdulaziz Al Hokair & Company (TADAWUL:4240) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SASE, rising to highs of ر.س22.12 and falling to the lows of ر.س16.74. 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 Fawaz Abdulaziz Al Hokair's current trading price of ر.س17.48 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 Fawaz Abdulaziz Al Hokair’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 Fawaz Abdulaziz Al Hokair

What's The Opportunity In Fawaz Abdulaziz Al Hokair?

Good news, investors! Fawaz Abdulaziz Al Hokair is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.53x is currently well-below the industry average of 22.06x, meaning that it is trading at a cheaper price relative to its peers. However, given that Fawaz Abdulaziz Al Hokair’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Fawaz Abdulaziz Al Hokair 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. 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 Fawaz Abdulaziz Al Hokair, at least in the near future.

What This Means For You

Are you a shareholder? Although 4240 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to 4240, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on 4240 for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

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. When we did our research, we found 4 warning signs for Fawaz Abdulaziz Al Hokair (3 are a bit concerning!) that we believe deserve your full attention.

If you are no longer interested in Fawaz Abdulaziz Al Hokair, 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.