Why Wan Hai Lines Ltd. (TWSE:2615) Could Be Worth Watching

Wan Hai Lines Ltd. (TWSE:2615), might not be a large cap stock, but it saw a decent share price growth of 12% on the TWSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Wan Hai Lines’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Wan Hai Lines

What Is Wan Hai Lines Worth?

Great news for investors – Wan Hai Lines is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Wan Hai Lines’s ratio of 7.58x is below its peer average of 9.65x, which indicates the stock is trading at a lower price compared to the Shipping industry. Although, there may be another chance to buy again in the future. This is because Wan Hai Lines’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Wan Hai Lines generate?

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 a negative profit growth of -3.5% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Wan Hai Lines. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although 2615 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to 2615, 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 2615 for a while, but hesitant on making the leap, we 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.

If you'd like to know more about Wan Hai Lines as a business, it's important to be aware of any risks it's facing. For example, Wan Hai Lines has 3 warning signs (and 2 which are potentially serious) we think you should know about.

If you are no longer interested in Wan Hai Lines, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.