Shares of Genting Singapore Ltd (SGX: G13) down by about 30% from its January peak.
This sizable decline raises a question: are Genting Singapore’s shares cheap now? It is an important question because if the firm’s shares are cheap, it might be a good opportunity for investors.
As a brief background, Genting Singapore is the operator of the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park.
So, are shares cheap or what?
Unfortunately, there is no easy answer.
However, we can still get some insight by comparing Genting Singapore’s current valuations with the market’s valuation, represented by the Straits Times Index. 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).
Genting Singapore currently has a PB ratio of 1.5, which is higher than the SPDR STI ETF’s PB ratio of 1.1. Similarly, its PE ratio is higher than that of the SPDR STI ETF; Genting Singapore shares trade 16.0 times earnings versus the ETF’s 11 times earnings. Finally, the casino operator’s dividend yield of 3.6% is marginally lower to the market’s yield of 3.7%. The lower a stock’s yield is, the less attractive its stock is.
In sum, we can argue that Genting Singapore is priced at a premium to the market average due to its high PB ratio, 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.