When Should You Buy Hutchison Port Holdings Trust (SGX:NS8U)?

Hutchison Port Holdings Trust (SGX:NS8U), might not be a large cap stock, but it saw significant share price movement during recent months on the SGX, rising to highs of US$0.20 and falling to the lows of US$0.17. 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$0.19 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.

View our latest analysis for Hutchison Port Holdings Trust

What Is Hutchison Port Holdings Trust 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 11.85x is currently trading slightly below its industry peers’ ratio of 13.17x, which means if you buy Hutchison Port Holdings Trust today, you’d be paying a reasonable price for it. And if you believe Hutchison Port Holdings Trust 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 Hutchison Port Holdings Trust’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 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. 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 a negative profit growth of -5.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hutchison Port Holdings Trust. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? NS8U 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 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 NS8U, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on NS8U for a while, now may not be the most advantageous 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 NS8U should the price fluctuate below the industry PE ratio.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 3 warning signs for Hutchison Port Holdings Trust (1 is a bit unpleasant) you should be familiar with.

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.