SIA Engineering Company Limited (SGX:S59), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SGX. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at SIA Engineering’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for SIA Engineering

What Is SIA Engineering Worth?

According to my valuation model, SIA Engineering seems to be fairly priced at around 8.3% below my intrinsic value, which means if you buy SIA Engineering today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth SGD2.56, then there’s not much of an upside to gain from mispricing. In addition to this, SIA Engineering has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of SIA Engineering look like?

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. With profit expected to grow by 70% over the next couple of years, the future seems bright for SIA Engineering. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in S59’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on S59, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing SIA Engineering at this point in time. Every company has risks, and we've spotted 1 warning sign for SIA Engineering you should know about.

If you are no longer interested in SIA Engineering, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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