Is There Now An Opportunity In 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$19.69 and falling to the lows of US$14.28. 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$14.28 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?

The share price seems sensible at the moment according to my price multiple model, where I compare 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 3.83x is currently trading slightly above its industry peers’ ratio of 2.32x, which means if you buy Genco Shipping & Trading today, you’d be paying a relatively sensible price for it. And if you believe that Genco Shipping & Trading should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Genco Shipping & Trading’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 does the future of Genco Shipping & Trading 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. Though in the case of Genco Shipping & Trading, it is expected to deliver a relatively unexciting earnings growth of 1.9%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? GNK’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at GNK? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on GNK, now may not be the most optimal time to buy, given it is trading around industry price multiples. 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.

If you want to dive deeper into Genco Shipping & Trading, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Genco Shipping & Trading 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.