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Hour Glass Ltd Is Trading Close To Its 52-Week Low Price: Is It Cheap Now?

Lawrence Nga

Hour Glass Ltd (SGX: AGS) is in the business of retailing luxury watches. It has a network of over 40 stores in Singapore, Malaysia, Thailand, Japan, Hong Kong, and Australia. The company is an official retailer of some of the world finest brands, such as Audemars Piguet, Hublot, and Patek Philippe.

At its current price of S$0.64, Hour Glass’ share price is just two cents higher than its 52-week low of S$0.62. This raises a question: Is Hour Glass cheap now? This question is important because if the company’s shares are cheap, it might be a good opportunity for investors.

Unfortunately, there is no easy answer. However, we can still get some insight by comparing Hour Glass’ 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).

Hour Glass currently has a PB ratio of 0.9, which is lower than the SPDR STI ETF’s PB ratio of 1.1. Similarly, its PE ratio is lower than that of the SPDR STI ETF’s (7.5 vs 11.6). On the other hand, the retailer’s dividend yield of 3.1% 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 Hour Glass is priced at a discount to the market average due to its low PB ratio and low PE ratio.

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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.