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Vicom Limited’s Valuation: Today vs. History

Vicom Limited (SGX: V01)  is a leading provider of vehicle inspection and testing services. It also provides non-vehicle-related technical testing and inspection services.

Over the past five and 10 years, Vicom has been a big winner in the stock market. Its stock price is up 76% and 419%, respectively.

I thought it’d be interesting to see where Vicom’s current valuations stand in relation to history. I’m going to be focusing on the company’s price-to-book (PB) ratio and price-to-earnings (PE) ratio.

At Vicom’s current share price of S$5.71, it has a PB ratio of 3.5. Here’s how the company’s PB ratio has changed over the past five years:

vicoms-pb-ratio-from-29-september-2011-to-29-september-2016
Source: S&P Global Market Intelligence

You can see that the company’s PB ratio is near the middle of where it has been.

The next chart plots Vicom’s PE ratio over the past five years. Unlike its PB ratio, Vicom’s current PE of 17.2 is actually somewhat near a five-year high.

vicoms-pe-ratio-from-29-september-2011-to-29-september-2016
Source: S&P Global Market Intelligence

The difference between how the company’s PB and PE ratios look like in relation to their respective histories is a sign that Vicom has been less efficient at producing a profit with the shareholder’s equity it has.

In any case, it is important to understand that valuation metrics are only one of the many aspects about a company that investors should consider before making any investment decision.

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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.