Here’s How Riverstone Holdings Limited’s Valuation Compares With The Overall Market

Riverstone Holdings Limited (SGX: AP4) is a company that produces cleanroom and medical rubber gloves.

Over the past five years, the company’s stock price has risen by a solid 324%. Given Riverstone’s strong long-term performance, I thought it would be interesting to have a look at the company’s valuations and compare them with the market’s.

The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market. The SPDR STI ETF is an exchange-traded fund that tracks Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Here’s a chart showing the PB ratios of Riverstone and the SPDR STI ETF:

Riverstone and SPDR STI ETF PB ratio
Source: S&P Global Market Intelligence and SPDR STI ETF website

At Riverstone’s current share price, it has a PB ratio of 3.9, which is more than three times the SPDR STI ETF’s PB ratio of 1.26.

The next chart we’re looking at is for the PE ratio of Riverstone and the market:

Riverstone and SPDR STI ETF PE ratio
Source: S&P Global Market Intelligence and SPDR STI ETF website

You can see that Riverstone has the higher PE ratio. This time, the glove maker’s PE ratio of 16 is 22.5% higher than the SPDR STI ETF’s earnings multiple of 13.1.

The dividend yield is the last valuation metric and you can see it in the chart below:

Riverstone and SPDR STI ETF dividend yield
Source: S&P Global Market Intelligence and SPDR STI ETF website

The SPDR STI ETF trumps this time around with its higher dividend yield of 3%. Riverstone only has a dividend yield of 2.41.% currently.

To sum up what we’ve seen, Riverstone is pricier than the market in terms of the PE ratio, PB ratio, and dividend yield. But none of what we’ve seen above should be taken as the definitive word on whether Riverstone will be a poor or good investment going forward.

Valuation metrics are just one of the many aspects about a company that investors should study before any investing decision can be reached.

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