At kr85.95, Is It Time To Put Wihlborgs Fastigheter AB (publ) (STO:WIHL) On Your Watch List?

Wihlborgs Fastigheter AB (publ) (STO:WIHL), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the OM. As a mid-cap stock with high coverage 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 examine Wihlborgs Fastigheter’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Wihlborgs Fastigheter

Is Wihlborgs Fastigheter Still Cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 Wihlborgs Fastigheter’s ratio of 7.21x is trading slightly above its industry peers’ ratio of 4.92x, which means if you buy Wihlborgs Fastigheter today, you’d be paying a relatively sensible price for it. And if you believe Wihlborgs Fastigheter should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like Wihlborgs Fastigheter’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Wihlborgs Fastigheter 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 Wihlborgs Fastigheter, at least in the near future.

What This Means For You

Are you a shareholder? Currently, WIHL 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 beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on WIHL, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on WIHL 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. 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 WIHL 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. Every company has risks, and we've spotted 3 warning signs for Wihlborgs Fastigheter (of which 2 don't sit too well with us!) you should know about.

If you are no longer interested in Wihlborgs Fastigheter, 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.