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Jardine Cycle & Carriage Ltd’s Stock Price Is Near A 52-Week Low: Is It Cheap Now?

Jardine Cycle & Carriage Ltd (SGX: C07) is a bona-fide conglomerate. In 2016, 71% of its underlying profit came from the Indonesia-listed Astra.

Astra operates in Indonesia and itself has seven different business segments: Automotive; Financial Services; Heavy Equipment & Mining; Agribusiness; Infrastructure & Logistics; Information Technology; and Property.

Currently, Jardine Cycle & Carriage’s shares are trading at S$39.17 each, which is near a 52-week low of S$38.00. This may raise an important question for investors: Is Jardine Cycle & Carriage a cheap 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 Jardine Cycle & Carriage’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).

Jardine Cycle & Carriage currently has a PB ratio of 1.9, which is 54% higher than the SPDR STI ETF’s PB ratio of 1.3. Similarly, Jardine Cycle & Carriage’s PE ratio is 22% higher than that of the SPDR STI ETF’s (14.3 vs 11.7). Meanwhile, the conglomerate’s dividend yield of 2.6% is lower than the dividend yield of 2.9% that the SPDR STI ETF has. The lower the yield of a stock is, the higher it is valued.

To sum it all up, we can argue that Jardine Cycle & Carriage is currently priced at a premium to the market given its higher PB and PE ratios, and 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.