Venture Corporation Ltd (SGX: V03) is an electronics manufacturing services provider.
At its current price of S$16.54 (at the time of writing), Venture’s shares are just 4% higher than its 52-week intraday low price of S$15.83. This raises a question: Is Venture cheap now? This question is important because if the firm’s shares are cheap, it might be a good opportunity for investors.
Unfortunately, there is no easy answer. Having said that, we can still get some insights by comparing Venture’s current valuations with the market’s valuation. 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).
Venture Corporation currently has a PB ratio of 2.2, which is higher than the SPDR STI ETF’s PB ratio of 1.1.
Yet, Venture Corporation’s PE ratio is comparable to that of the SPDR STI ETF’s (11.0 vs 11.0). In addition, the company’s dividend yield of 5.0% is higher than the market’s yield of 3.5%. The higher a stock’s yield is, the lower is its valuation.
In sum, we can argue that Venture Corporation is priced fairly to the market as its PE ratio is comparable to the market average, while its high PB ratio is offset by its high 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.