Is It Too Late To Consider Buying Genco Shipping & Trading Limited (NYSE:GNK)?

Genco Shipping & Trading Limited (NYSE:GNK), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$19.50 and falling to the lows of US$15.65. 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 Genco Shipping & Trading's current trading price of US$15.87 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 Genco Shipping & Trading’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Genco Shipping & Trading

What's The Opportunity In Genco Shipping & Trading?

Genco Shipping & Trading appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. We’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 9.88x is currently well-above the industry average of 4.42x, meaning that it is trading at a more expensive price relative to its peers. Furthermore, Genco Shipping & Trading’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will Genco Shipping & Trading generate?

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 relatively muted profit growth of 0.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Genco Shipping & Trading, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in GNK’s outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe GNK should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on GNK for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Genco Shipping & Trading has 2 warning signs we think you should be aware of.

If you are no longer interested in Genco Shipping & Trading, 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.