ComfortDelGro Corporation Ltd Stock Has Fallen By 18% In the Last 12 Months: Is It Cheap Now?
ComfortDelGro Corporation Ltd (SGX: C52) is a land transport company with operations mainly in Singapore, Australia, the United Kingdom, and China. It is also the majority owner of two other Singapore-listed companies, the vehicle and non-vehicle testing and inspection outfit Vicom Limited (SGX: V01), and bus and rail services operator SBS Transit Ltd (SGX: S61).
Over the last 12 months, ComfortDelGro has seen its stock price fall by 18% to S$2.32 currently. Given the magnitude of the decline, investors may wonder: Is ComfortDelGro a cheap stock at the moment?
Unfortunately, there is no easy answer since there are many ways to look at a company’s valuation. But, we can still get some insight by comparing ComfortDelGro’s current valuations with the market’s.
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).
Right now, ComfortDelGro has a PB ratio of 1.9, while the SPDR STI ETF has a PB ratio of 1.3. So, ComfortDelGro is clearly more expensive than the market, based on the PB ratio. In terms of the PE ratio, ComfortDelGro is trading at a 34% premium compared to the SPDR STI ETF (15.6 vs 11.6). Lastly, we have the dividend yield. At current prices, ComfortDelGro’s dividend yield of 4.7% is materially higher than the SPDR STI ETF’s yield of 3.1%. (The higher the yield is, the lower a stock’s valued.)
To sum it all up, we can argue that ComfortDelGro is currently priced fairly as compared to the market. This takes into account the company’s higher than average PB and PE ratios that are offset by a high dividend yield.