Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SGX over the last few months, increasing to S$1.02 at one point, and dropping to the lows of S$0.89. 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 Yangzijiang Shipbuilding (Holdings)'s current trading price of S$0.92 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Yangzijiang Shipbuilding (Holdings)'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 Yangzijiang Shipbuilding (Holdings)

What's The Opportunity In Yangzijiang Shipbuilding (Holdings)?

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 4.49x is currently trading slightly below its industry peers' ratio of 9.06x, which means if you buy Yangzijiang Shipbuilding (Holdings) today, you'd be paying a reasonable price for it. And if you believe Yangzijiang Shipbuilding (Holdings) should be trading in this range, then there isn't much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Yangzijiang Shipbuilding (Holdings)'s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Yangzijiang Shipbuilding (Holdings)?

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 Yangzijiang Shipbuilding (Holdings), it is expected to deliver a highly negative earnings growth in the next few years, which doesn't help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, BS6 appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on BS6, take a look at whether its fundamentals have changed.

Are you a potential investor? If you've been keeping an eye on BS6 for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there's less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help crystallize your views on BS6 should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Yangzijiang Shipbuilding (Holdings), you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Yangzijiang Shipbuilding (Holdings) and we think they deserve your attention.

If you are no longer interested in Yangzijiang Shipbuilding (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.