Is Now The Time To Look At Buying ComfortDelGro Corporation Limited (SGX:C52)?

ComfortDelGro Corporation Limited (SGX:C52), is not the largest company out there, but it saw significant share price movement during recent months on the SGX, rising to highs of S$1.48 and falling to the lows of S$1.25. 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 ComfortDelGro's current trading price of S$1.30 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ComfortDelGro’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Our analysis indicates that C52 is potentially undervalued!

What's The Opportunity In ComfortDelGro?

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. 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 ComfortDelGro’s ratio of 17.85x is trading slightly above its industry peers’ ratio of 16.47x, which means if you buy ComfortDelGro today, you’d be paying a relatively reasonable price for it. And if you believe ComfortDelGro should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like ComfortDelGro’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.

Can we expect growth from ComfortDelGro?

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. ComfortDelGro's earnings over the next few years are expected to increase by 43%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? C52’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at C52? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on C52, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for C52, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into ComfortDelGro, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for ComfortDelGro and we think they deserve your attention.

If you are no longer interested in ComfortDelGro, 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.