Is It Time To Consider Buying Jardine Cycle & Carriage Limited (SGX:C07)?

While Jardine Cycle & Carriage Limited (SGX:C07) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the SGX. 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. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Jardine Cycle & Carriage’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Jardine Cycle & Carriage

Is Jardine Cycle & Carriage 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 Jardine Cycle & Carriage’s ratio of 8.57x is trading slightly below its industry peers’ ratio of 8.68x, which means if you buy Jardine Cycle & Carriage today, you’d be paying a decent price for it. And if you believe Jardine Cycle & Carriage 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 Jardine Cycle & Carriage’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 kind of growth will Jardine Cycle & Carriage generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Though in the case of Jardine Cycle & Carriage, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? C07 seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 C07, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on C07 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. 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 C07 should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Jardine Cycle & Carriage, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Jardine Cycle & Carriage has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Jardine Cycle & Carriage, 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. 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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