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Can Swire Pacific Be a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Swire Pacific Limited (SWRAY - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Swire Pacific has a trailing twelve months PE ratio of 12.06, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.85. If we focus on the stock’s long-term PE trend, the current level puts Swire Pacific’s current PE ratio above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Diversified Operations industry’s trailing twelve months PE ratio, which stands at 20.66. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Swire Pacific has a forward PE ratio (price relative to this year’s earnings) of just 15.92, so on the ground of the forward earnings estimates, we might say that the company’s share price is likely to appreciate in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Swire Pacific has a P/S ratio of about 1.17. This is far lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, SWRAY is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Swire Pacific currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes the stock a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 4.29, which is far better than the industry average of 12.11. Clearly, SWRAY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Swire Pacific might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives SWRAY a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current year has seen no estimate going higher in the past sixty days compared to one lower, while the next year estimate has seen one upward revision and no downward revision in the same time period.
This had a significant impact on the consensus estimate as the current year consensus estimate has fallen by 6.5% in the past two months, while the next year estimate has increased by 19%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite this somewhat mixed trend, the stock has a Zacks Rank #2 (Buy) on the back of its strong value metrics and this is why we are expecting above-average performance from the company in the near-term
Bottom Line
Swire Pacificis an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, Moreover, a strong industry rank (Top 29% out of more than 250 industries) along with a favorable Zacks Rank #2 (Buy) further supports the growth potential of the stock. In fact, over the past two years, the Zacks classified Diversified Operations Industry has clearly outperformed the broader market, as you can see below:
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Can Swire Pacific Be a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Swire Pacific Limited (SWRAY - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Swire Pacific has a trailing twelve months PE ratio of 12.06, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.85. If we focus on the stock’s long-term PE trend, the current level puts Swire Pacific’s current PE ratio above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Diversified Operations industry’s trailing twelve months PE ratio, which stands at 20.66. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Swire Pacific has a forward PE ratio (price relative to this year’s earnings) of just 15.92, so on the ground of the forward earnings estimates, we might say that the company’s share price is likely to appreciate in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Swire Pacific has a P/S ratio of about 1.17. This is far lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, SWRAY is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Swire Pacific currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes the stock a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 4.29, which is far better than the industry average of 12.11. Clearly, SWRAY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Swire Pacific might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives SWRAY a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current year has seen no estimate going higher in the past sixty days compared to one lower, while the next year estimate has seen one upward revision and no downward revision in the same time period.
This had a significant impact on the consensus estimate as the current year consensus estimate has fallen by 6.5% in the past two months, while the next year estimate has increased by 19%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Swire Pacific Ltd. Price and Consensus
Swire Pacific Ltd. Price and Consensus | Swire Pacific Ltd. Quote
Despite this somewhat mixed trend, the stock has a Zacks Rank #2 (Buy) on the back of its strong value metrics and this is why we are expecting above-average performance from the company in the near-term
Bottom Line
Swire Pacificis an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, Moreover, a strong industry rank (Top 29% out of more than 250 industries) along with a favorable Zacks Rank #2 (Buy) further supports the growth potential of the stock. In fact, over the past two years, the Zacks classified Diversified Operations Industry has clearly outperformed the broader market, as you can see below:
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>