CapitaLand Limited Stock Is Up By 23% In The Last 12 Months: Is It Expensive Now?

CapitaLand Limited (SGX: C31) is a real estate developer and owner. Its diversified global real estate portfolio includes integrated developments, shopping malls, serviced residences, offices and homes.

Over the last 12 months, CapitaLand’s stock price has climbed by 23%. This may raise an important question for investors: Is CapitaLand an expensive stock now?

Unfortunately, there is no easy answer since there are many ways to look at a company’s valuation. But, we can still get some insight by comparing CapitaLand’s current valuations 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 the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

CapitaLand currently has a PB ratio of 0.90, which is lower than the SPDR STI ETF’s PB ratio of 1.3. This makes Capitaland 31% cheaper than the market based on the PB ratio. Similarly, Capitaland’s PE ratio is 10% lower than that of the SPDR STI ETF’s (10.3 vs 11.5).

On the other hand, Capitaland has a slightly lower dividend yield of 2.7%; the SPDR STI ETF has a yield of 3%. The lower the yield of a stock is, the higher it is valued. As such, CapitaLand is pricier than the market based on the dividend yield.

To sum it all up, we can argue that CapitaLand is currently priced at a slight discount to the market given its lower PB and PE ratios, and comparable though slightly lower dividend yield.

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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.