Should You Investigate Tronox Holdings plc (NYSE:TROX) At US$12.74?

Tronox Holdings plc (NYSE:TROX), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Tronox Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Tronox Holdings

Is Tronox Holdings Still Cheap?

Great news for investors – Tronox Holdings is still trading at a fairly cheap price 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 Tronox Holdings’s ratio of 3.36x is below its peer average of 14.27x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What’s more interesting is that, Tronox Holdings’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Tronox Holdings 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 -2.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Tronox Holdings. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although TROX is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to TROX, 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 TROX 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.

If you want to dive deeper into Tronox Holdings, you'd also look into what risks it is currently facing. Our analysis shows 5 warning signs for Tronox Holdings (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.

If you are no longer interested in Tronox Holdings, 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.