Is It Too Late To Consider Buying Longfor Group Holdings Limited (HKG:960)?

Simply Wall St · 10/14 23:03

Longfor Group Holdings Limited (HKG:960) led the SEHK gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Longfor Group Holdings’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Longfor Group Holdings

What's The Opportunity In Longfor Group Holdings?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 7.95x is currently trading slightly above its industry peers’ ratio of 7.92x, which means if you buy Longfor Group Holdings today, you’d be paying a relatively sensible price for it. And if you believe that Longfor Group Holdings should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. So, is there another chance to buy low in the future? Given that Longfor Group 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.

What kind of growth will Longfor Group Holdings generate?

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SEHK:960 Earnings and Revenue Growth October 14th 2024

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. Longfor Group Holdings' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 960’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at 960? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 960, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 960, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 5 warning signs (1 is concerning!) that you ought to be aware of before buying any shares in Longfor Group Holdings.

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