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StarHub Ltd’s Stock Is Near A 52-Week Low Now: Is It A Bargain?

StarHub Ltd (SGX: CC3) is a company that probably needs no introduction, given that it is one of Singapore’s main operational telcos.

At the current price of S$2.30, the company’s stock is just 1.8% higher than a 52-week low of S$2.26. 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 StarHub’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).

StarHub currently has a PB ratio of 11.68, which is significantly higher than the SPDR STI ETF’s PB ratio of 1.26. It’s a similar picture with the PE ratio too, as StarHub has a PE ratio of 16.25 while the SPDR STI ETF has an earnings multiple of just 11.87.

On the other hand, StarHub’s dividend yield is much higher than the SPDR STI ETF’s (7.0% vs 2.84%). The higher a stock’s yield is, the lower is its valuation.

Putting it all together, we can argue that StarHub is trading at a premium to the market average, given its higher PB ratio and PE ratio. Income investors may still find the company’s market-beating dividend yield attractive, but it’s worth noting that a stock’s yield says nothing about its ability to sustain its dividend payouts.

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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.