Should You Investigate Frasers Property Limited (SGX:TQ5) At S$1.09?

While Frasers Property Limited (SGX:TQ5) might not be the most widely known stock at the moment, it had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of S$1.04 to S$1.10. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Frasers Property’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 Frasers Property

What Is Frasers Property Worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 6.5x is currently trading slightly below its industry peers’ ratio of 10.04x, which means if you buy Frasers Property today, you’d be paying a decent price for it. And if you believe Frasers Property should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like Frasers Property’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Frasers Property look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. 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 Frasers Property, at least in the near future.

What This Means For You

Are you a shareholder? Currently, TQ5 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 optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on TQ5, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on TQ5 for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, 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 TQ5 should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Frasers Property, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with Frasers Property (including 2 which are significant).

If you are no longer interested in Frasers Property, 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.