An Investor’s Look At Wilmar International Limited’s Valuations: Today vs. History

There are successful long-term investors such as Walter Schloss who look at lists of stocks that have fallen in price for potential investments.

Over the past year, companies in Singapore’s stock market that are in the palm oil industry have been whacked hard. The eight palm oil companies that are in Singapore’s stock market (as of July 2014) have seen their share prices fall by 19% on average since 10 August 2015.

I thought it’d be interesting to look at the current valuations of the largest palm oil player in Singapore’s market, Wilmar International Limited (SGX: F34), and compare them with their historical ranges. At Wilmar’s share price of S$3.09 at the moment, it has a price-to-earnings (PE) ratio of 13.7 and a price-to-book ratio of 0.99.

Here’s a chart showing Wilmar’s PE ratio over the past five years:

Wilmar's PE ratio from 10 August 2011 to 10 August 2016 (2)
Source: S&P Global Market Intelligence

Here’s one plotting Wilmar’s PB ratio for the same timeframe as above:

Wilmar's PB ratio from 10 August 2011 to 10 August 2016
Source: S&P Global Market Intelligence

As you can see, Wilmar’s current PE and PB ratios are near five-year lows. But, it’s worth noting that a company with a low valuation in relation to history does not necessarily mean it is a bargain. After all, the ratios are based on past information whereas a company’s future stock performance will largely depend on the performance of its business in the years ahead.

There are many other factors that have to be considered before any investing decision can be reached with Wilmar. So, what we’ve learned here about the company should only be taken as a useful head-start for further study.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.