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Polaris Infrastructure Inc. (TSE:PIF), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Polaris Infrastructure’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What is Polaris Infrastructure worth?
Great news for investors – Polaris Infrastructure is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Polaris Infrastructure’s ratio of 10.25x is below its peer average of 18.59x, which indicates the stock is trading at a lower price compared to the Renewable Energy industry. What’s more interesting is that, Polaris Infrastructure’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Polaris Infrastructure look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted revenue growth of 5.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Polaris Infrastructure, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since PIF is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on PIF for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PIF. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Polaris Infrastructure has 4 warning signs (and 1 which is concerning) we think you should know about.
If you are no longer interested in Polaris Infrastructure, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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