Wilmar International Limited (SGX:F34) is considered a high-growth stock, but its last closing price of SGD3.21 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors. See our latest analysis for Wilmar International
Where’s the growth?Investors in Wilmar International have been patiently waiting for the uptick in earnings. If you believe the analysts covering the stock then the following year will be very interesting. The consensus forecast from 16 analysts is bullish with earnings per share estimated to surge from current levels of $0.171 to $0.227 over the next three years. This indicates an estimated earnings growth rate of 10.01% per year, on average, which illustrates an optimistic outlook in the near term.
Can F34’s share price be justified by its earnings growth?
Wilmar International is available at a price-to-earnings ratio of 13.97x, showing us it is overvalued compared to the SG market average ratio of 13.51x , and undervalued based on its latest annual earnings update compared to the food average of 14.35x .
Wilmar International’s price-to-earnings ratio stands at 13.97x, which is low, relative to the industry average. This already suggests that the stock could be undervalued. But, since Wilmar International is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 13.97x and expected year-on-year earnings growth of 10.01% give Wilmar International a higher PEG ratio of 1.4x. This tells us that when we include its growth in our analysis Wilmar International’s stock can be considered slightly overvalued , based on the fundamentals.
What this means for you:
F34’s current overvaluation could signal a potential selling opportunity to reduce your exposure to the stock, or it you’re a potential investor, now may not be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:
- Financial Health: Is F34’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Past Track Record: Has F34 been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of F34’s historicals for more clarity.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.