An Investor’s Look At Riverstone Holdings Limited’s Valuations: Today vs. History

Riverstone Holdings Limited (SGX: AP4)  is a company that produces cleanroom and medical gloves that are made of rubber. The company has been a solid winner in Singapore’s stock market over the last five years with its shares having climbed by 378% in price alone.

I thought it’d be interesting to look at Riverstone’s current valuations and compare them with their historical ranges. At Riverstone’s current share price of S$0.88, it has a price-to-earnings ratio of 15 and a price-to-book ratio of 4.

This is a chart showing Riverstone’s PE ratio since 30 August 2011:

Riverstone's PE ratio since 30 August 2011
Source: S&P Global Market Intelligence

The following chart plots the company’s PB ratio for the same timeframe as above:

Riverstone's PB ratio since 30 August 2011
Source: S&P Global Market Intelligence

So, what we can see is that Riverstone’s PE and PB ratios are both at the higher end of where they’ve been in the past five years. In other words, the company’s solid returns have received some help from rising valuations.

In any case, it is important to understand that valuation ratios are only one of the many aspects of a business that investors should consider before committing to an investment. Other qualitative factors such as the company’s future growth potential and quality of management must also be considered before an investment decision is made.

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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.