Hour Glass Ltd (SGX: AGS) is in the retail business, dealing specifically with luxury watches. It has a network of over 40 boutiques across Asia Pacific in Singapore, Malaysia, Thailand, Japan, Hong Kong, and Australia. The company is an official retailer for some of the world finest watch brands, such as Audemars Piguet, Cartier, Hublot, IWC, Patek Philippe, and more.
Hour Glass’s current stock price of S$0.655 is just 5.6% higher than a 52-week low of S$0.62. This raises a question: Is the company a bargain now?
Unfortunately, there is no easy answer. But, we can still get some insight by comparing Hour Glass’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).
Hour Glass currently has a PB ratio of 0.94, which is lower than the SPDR STI ETF’s PB ratio of 1.25. It’s a similar picture with the PE ratio and dividend yield. Hour Glass’s PE ratio is just 9.1, which is lower than the SPDR STI ETF’s PE ratio of 11.6. As for the dividend yield, Hour Glass comes in ahead with a yield of 3.05% compared to the market’s yield of 2.89%; the higher a stock’s yield is, the lower is its valuation.
Putting it all together, we can argue that Hour Glass trading at a discount to the market average, due to its lower PE and PB ratios, and higher 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.