Is It Time To Buy Keppel Corporation Limited (SGX:BN4)?

Keppel Corporation Limited (SGX:BN4), a industrials company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD8.29 and falling to the lows of SGD7.24. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Keppel's current trading price of SGD7.24 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Keppel’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Keppel

Is Keppel still cheap?

According to my valuation model, Keppel seems to be fairly priced at around 10.24% above my intrinsic value, which means if you buy Keppel today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth SGD6.57, there’s only an insignificant downside when the price falls to its real value. Furthermore, Keppel’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Keppel 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. Keppel’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? BN4’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 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 tabs on BN4, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Keppel. You can find everything you need to know about Keppel in the latest infographic research report. If you are no longer interested in Keppel, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.