Should You Investigate Hutchison Port Holdings Trust (SGX:NS8U) At US$0.17?

Hutchison Port Holdings Trust (SGX:NS8U), is not the largest company out there, but it saw significant share price movement during recent months on the SGX, rising to highs of US$0.24 and falling to the lows of US$0.16. 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 Hutchison Port Holdings Trust's current trading price of US$0.17 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 Hutchison Port Holdings Trust’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 NS8U is potentially undervalued!

What Is Hutchison Port Holdings Trust Worth?

Good news, investors! Hutchison Port Holdings Trust is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 6.74x is currently well-below the industry average of 11.74x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Hutchison Port Holdings Trust’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Hutchison Port Holdings Trust look like?

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. 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. 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 Hutchison Port Holdings Trust, at least in the near future.

What This Means For You

Are you a shareholder? Although NS8U is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to NS8U, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on NS8U for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 2 warning signs for Hutchison Port Holdings Trust (of which 1 is significant!) you should know about.

If you are no longer interested in Hutchison Port Holdings Trust, 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.