Yahoo Finance Is British American Tobacco (Malaysia) Berhad (KLSE:BAT) Potentially Undervalued?
British American Tobacco (Malaysia) Berhad (KLSE:BAT), might not be a large cap stock, but it saw significant share price movement during recent months on the KLSE, rising to highs of RM10.04 and falling to the lows of RM8.94. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether British American Tobacco (Malaysia) Berhad's current trading price of RM9.38 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at British American Tobacco (Malaysia) Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for British American Tobacco (Malaysia) Berhad
What's The Opportunity In British American Tobacco (Malaysia) Berhad?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% below my intrinsic value, which means if you buy British American Tobacco (Malaysia) Berhad today, you’d be paying a fair price for it. And if you believe that the stock is really worth MYR10.52, then there’s not much of an upside to gain from mispricing. Furthermore, British American Tobacco (Malaysia) Berhad’s low beta implies that the stock is less volatile than the wider market.
What does the future of British American Tobacco (Malaysia) Berhad 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. Though in the case of British American Tobacco (Malaysia) Berhad, it is expected to deliver a relatively unexciting earnings growth of 4.4%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in BAT’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on BAT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with British American Tobacco (Malaysia) Berhad (including 1 which is significant).
If you are no longer interested in British American Tobacco (Malaysia) Berhad, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
