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Vicom Limited Is Trading Close to Its 52-Week Low. Does That Make It Cheap?

Vicom Limited (SGX: V01) is a leading provider of technical testing and inspection services with operations primarily in Singapore.

The company is majority-owned by land-transport giant ComfortDelGro Corporation Ltd (SGX: C52).

At its current price of S$6.11 (as of 11 February), Vicom’s stock price is 4% higher than its 52-week low of S$5.85. Does this mean Vicom is cheap now? If so, it might be a good opportunity for investors to buy shares.

We can get some insight into Vicom’s worth by comparing its current valuation with the market’s valuation. The three valuation metrics I will focus on are the price-to-book (P/B) ratio, price-to-earnings (P/E) 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).

Vicom currently has a P/B ratio of 4.0, which is higher than the SPDR STI ETF’s P/B ratio of 1.1. Similarly, its P/E ratio is higher than that of the SPDR STI ETF — 20.0 vs. 11.3. On the other hand, its dividend yield of 6.0% is higher than the market’s yield of 3.6%. The higher a stock’s yield, the lower its valuation.

Vicom’s high P/B and P/E ratios mean it’s priced at a premium to the market average. Still, dividend investors might be attracted to the company because of 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.