At US$16.52, Is It Time To Put ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) On Your Watch List?

ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$27.01 and falling to the lows of US$16.24. 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 ZIM Integrated Shipping Services' current trading price of US$16.52 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 ZIM Integrated Shipping Services’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 ZIM Integrated Shipping Services

What Is ZIM Integrated Shipping Services Worth?

Great news for investors – ZIM Integrated Shipping Services 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 ZIM Integrated Shipping Services’s ratio of 1.38x is below its peer average of 3.83x, 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 ZIM Integrated Shipping Services’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 does the future of ZIM Integrated Shipping Services 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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for ZIM Integrated Shipping Services, at least in the near future.

What This Means For You

Are you a shareholder? Although ZIM 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 ZIM, 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 tabs on ZIM for some time, but hesitant on making the leap, we recommend you dig deeper 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Be aware that ZIM Integrated Shipping Services is showing 2 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable...

If you are no longer interested in ZIM Integrated Shipping Services, 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.