What Does Keppel Corporation Limited's (SGX:BN4) Share Price Indicate?

Keppel Corporation Limited (SGX:BN4), might not be a large cap stock, but it saw significant share price movement during recent months on the SGX, rising to highs of S$5.60 and falling to the lows of S$5.05. 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 Keppel's current trading price of S$5.22 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?

Keppel appears to be overvalued by 39% at the moment, based on my discounted cash flow valuation. The stock is currently priced at S$5.22 on the market compared to my intrinsic value of SGD3.76. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Keppel’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Keppel?

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. With profit expected to more than double over the next couple of years, the future seems bright for Keppel. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in BN4’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BN4 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on BN4 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for BN4, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Keppel as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Keppel you should be mindful of and 1 of these is significant.

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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.
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