Let's talk about the popular Singapore Airlines Limited (SGX:C6L). The company's shares saw its share price hover around a small range of S$6.22 to S$6.75 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Singapore Airlines’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 Singapore Airlines

What's The Opportunity In Singapore Airlines?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.66x is currently trading slightly below its industry peers’ ratio of 10.61x, which means if you buy Singapore Airlines today, you’d be paying a decent price for it. And if you believe that Singapore Airlines should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, it seems like Singapore Airlines’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Singapore Airlines?

SGX:C6L Earnings and Revenue Growth January 9th 2025

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Singapore Airlines, at least in the near future.

What This Means For You

Are you a shareholder? C6L seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on C6L, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on C6L for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on C6L should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Singapore Airlines, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Singapore Airlines (of which 1 doesn't sit too well with us!) you should know about.

If you are no longer interested in Singapore Airlines, you can use our free platform to see our list of over 50 other stocks with a high growth potential.