UOL Group Limited (SGX: U14) is a property company that is involved in property development and management, property investments, and hotel businesses.
At the current UOL share price of S$6.26, UOL’s shares are just slightly higher than the 52-week low price of S$6.00. This raises a question: Is the UOL share price cheap now? This question is important because if the firm’s shares are cheap, it might be a good value stock opportunity for investors.
Unfortunately, there is no easy answer. However, we can still get some insight by comparing UOL’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).
UOL currently has a PB ratio of 0.6, which is lower than the SPDR STI ETF’s PB ratio of 1.1. Yet, its PE ratio is higher than that of the SPDR STI ETF’s (13.5 vs 11.5). Also, the property company’s dividend yield of 2.8% is lower than the market’s yield of 3.5%. The lower a stock’s yield is, the higher is its valuation.
In sum, we can argue that the UOL share price is fair to the market average due to its low PB ratio, offset by its high PE ratio and low 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.