Should You Think About Buying Churchill China plc (LON:CHH) Now?

Simply Wall St
·4 min read

Churchill China plc (LON:CHH), might not be a large cap stock, but it saw a decent share price growth in the teens level on the AIM over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Churchill China’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Churchill China

What's the opportunity in Churchill China?

According to my 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. 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 Churchill China’s ratio of 30.76x is trading slightly above its industry peers’ ratio of 30.27x, which means if you buy Churchill China today, you’d be paying a relatively sensible price for it. And if you believe that Churchill China should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Churchill China’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Churchill China?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Churchill China's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CHH’s positive outlook, with shares trading around industry price multiples. 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 CHH? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on CHH, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for CHH, which 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.

If you want to dive deeper into Churchill China, you'd also look into what risks it is currently facing. For example - Churchill China has 1 warning sign we think you should be aware of.

If you are no longer interested in Churchill China, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Recommended Stories

  • How the Royals Wore Their Love and Respect at Prince Philip’s Funeral

    Chris Jackson/GettyThe queen has a brooch for every occasion—even the funeral of her husband, Prince Philip. The queen’s mourning clothes, though a stark contrast to her usual pastel ensembles, came accented with a special accessory that paid homage to her partner of 73 years.According to Express, the queen wore her Richmond Brooch on Saturday. It’s one of the largest in her collection, the paper reported, and was a wedding present for her grandmother Queen Mary’s nuptials in 1893. Usually the Queen wears the pin, made of diamonds, with a hanging pear-shaped pearl drop. But that feature was removed for the funeral.The sparkling accessory lit up the queen’s all-black look, and matched her face mask—also black, with white trim around the edges. The monarch sat alone through the funeral, which was pared-down due to the pandemic, like so many others.Prince Harry and Prince William Reunite After Prince Philip’s Funeral, Where the Queen Sat AloneBut the queen was not solitary in her statement jewelry. Kate Middleton also brought her own. Actually, it came from the queen: the Duchess wore a four-strand pearl necklace borrowed from Elizabeth’s collection.Today reports that it was made with pearls gifted from the Japanese government. Princess Diana wore the choker to a dinner in 1982.Kate’s matching pearl-drop earrings, which peeked out from underneath her netted black fascinator, were also from the Queen’s jewelry box. For the somber affair, the Duchess was able to sneak in a dash of glamour with her veil and Roland Mouret dress.One photographer caught Kate right before she exited her vehicle, and she stared straight into the camera’s lens. Such determined, direct eye contact isn’t something the Duchess is known for, but her look set the tone for a dignified, if very different, type of royal funeral.As had been previously reported, the royals did not wear military dress. Following their father and grandfather’s coffin, Prince Charles, Princess Anne, Prince Andrew, Prince Edward, Prince William, and Prince Harry were all seen wearing medals, a compromise reached after an internal debate in the royal family about the appropriate dress for Harry and Andrew.Camilla Parker Bowles wore pearls and a brooch that also dripped with significance. As Hello noted, she showed up in the so-called Bugle brooch, which honored Philip’s tenure as Colonel-in-Chief of The Rifles, an infantry regiment of the British Army.For his final public engagement last year, the Duke of Edinburgh passed on his position to Camilla, who is his daughter-in-law. So it’s a significant and symbolic jewelry choice for the day.Princess Eugenie, a new mother who named her infant son after Philip, wore a netted veil to the ceremony. It was similar to Kate’s, though Eugenie paired hers with an oversized black headband.Unlike the other women, Eugenie did not wear much jewelry, save for a simple pair of earrings. She did, however, wear a rather trendy Gabriela Hearst trench coat, per the Daily Mail.Penny Brabourne, Countess Mountbatten, a close friend of Philip’s and fellow equestrian, was one of the 30 guests who was not a direct family member. (She is married to Philip’s godson, Norton Knatchbull.) She wore a black pillbox hat and fitted suit, along with a crystal fern brooch.Of course Meghan Markle, who is pregnant, was unable to travel from Los Angeles with Prince Harry. She might not have been there in person—the former Duchess reportedly watched from home—but Meghan ensured a part of her was present. Per The Daily Mail, Meghan left a handwritten note on a wreath left at the chapel. The royal family did not speak at the event. Emotions were expressed in other ways. Some of it was literal, like when Sophie, the Countess of Wessex wiped away tears in the chapel. Some of it was more symbolic, like the queen sitting alone while bidding goodbye to her husband. Or William and Harry chatting after the ceremony, two estranged brothers brought together through grief. And much of it was through fashion: small nods to history, and hand-me-downs representing the continuation of longstanding royal tradition. Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • Father of teen arrested with AK47 in New York subway station was killed in police shootout

    18-year-old man from Ohio with assault rifle and wearing gas mask taken into custody

  • Sharon Osbourne is 'angry' and 'hurt' since getting fired from 'The Talk'

    Sharon Osbourne sat down with Bill Maher on Friday for her first interview since getting fired from 'The Talk.'

  • Franklin Graham believes Jesus would take COVID vaccine. He’s still catching grief.

    ‘Satanic sellout,’ one angry follower posts.

  • After taking 13 flights on Frontier Airlines, I've figured how to get the best experience for the cheapest price. Here's what to know.

    Frontier boasts its dirt-cheap tickets but extra fees can add to the total cost. Here's how I avoid them and still get a great flying experience.

  • With FedEx shootings, America suffers 6th consecutive week with a mass killing

    Almost 50 people have died in eight shootings since March 13.

  • Home prices are up 17% over the past year, while inventory remains low: Redfin

    During the four-week period ending on April 11, 43% of homes sold over the listing price, according to Redfin.

  • Prince Philip was 'glue' that held wider family together, says German relative Princess Xenia

    The Duke of Edinburgh was the "glue" that held his wider family together, his German great niece said on Saturday. Princess Xenia of Hohenlohe-Langenburg said the Duke's longevity meant he was the one common link to the past for foreign-based branches of the family, for whom he was an "idol". Her brother, Prince Philipp, is one of three German relatives of the Duke given the honour of being among the 30 mourners at St George’s Chapel. The Duke's four sisters all married into the German aristocracy but were not invited to his wedding in 1947 because of sensitivities around the Second World War. However Prince Philip, who outlived all his sisters by decades, remained close to their descendants and often visited them in Germany. Speaking from Munich, Princess Xenia said: "He's been like a glue for the family, because sadly a lot of our grandmothers passed away much too early. "But he was always there, he was the link, so he brought all of us cousins, even though we were in Germany – a lot of us but not all of us – he brought us all together on a lot of family occasions, the last one having been his 90th birthday celebrations 10 years ago at Windsor. We were all there, there was a huge bunch of us, and it was lovely."

  • How Meghan ensured she had a part in Prince Philip's funeral – with a handwritten note on wreath

    The Duchess of Sussex wrote the card attached to the wreath sent by her and Prince Harry to ensure that, in a small way, she played a part in the Duke of Edinburgh's funeral service. Meghan, who is heavily pregnant with the couple's second child, had hoped to attend the ceremony but was advised against travelling by her doctor. The 39-year-old was watching the funeral on television at home in Montecito, California. The Sussexes' tribute was among nine family wreaths laid in the Quire of St George's Chapel, propped against the stalls on each side of the Duke's coffin. Buckingham Palace aides declined to provide details of the other wreaths, saying they were private. But a source close to the Sussexes confirmed that theirs had been designed and handmade by Willow Crossley, a Cotswold florist known for her natural, rustic arrangements. The variety of locally sourced flowers, some of which were picked from the designer's garden, were chosen due to their particular significance.

  • UK warships to sail for Black Sea in May as Ukraine-Russia tensions rise- Sunday Times

    The deployment is aimed at showing solidarity with Ukraine and Britain's NATO allies, the newspaper reported https://bit.ly/32pc4BK. One Type 45 destroyer armed with anti-aircraft missiles and an anti-submarine Type 23 frigate will leave the Royal Navy's carrier task group in the Mediterranean and head through the Bosphorus into the Black Sea, according to the report. RAF F-35B Lightning stealth jets and Merlin submarine-hunting helicopters will stand ready on the task group's flag ship, the carrier HMS Queen Elizabeth, to support the warships in the Black Sea, the report added.

  • Son of Prince Philip's former protection officer mistook Duke for 'someone from the pub'

    Prince Philip’s former protection officer yesterday revealed his son once assumed that the Duke was "someone from the pub" when he phoned the family’s house. Richard Griffin, who spent over 30 years in protection officer roles for the Royal Family, told the BBC that the child’s confusion resulted in an anecdote that the Duke used to "dine out on". Mr Griffin said: "He rang up one day and my five year-old son answered the phone. He used to call me 'Dick' so he said, 'Can I speak to Dick please?'. "He [his son] said, 'He’s in the garden, I’ll go and get him. Who shall I say is calling?' He [the Duke] said, 'The Duke of Edinburgh'. He said all he heard was my little boy yell out, ‘Dad, can you come to the phone, someone from the pub wants to speak to you!’” Speaking shortly before the Duke’s funeral on Saturday, Mr Griffin said that the Duke "wouldn’t bother" phoning his house via a switchboard, instead ringing directly.

  • Indianapolis FedEx shooting: Who were the eight victims?

    Four of the eight who died at a FedEx warehouse were members of the Sikh community.

  • Photos of Prince Harry and Prince William walking apart at Prince Philip’s funeral don’t show the whole picture of their relationship

    Prince Harry and Prince William walked separately at Prince Philip's funeral, with Peter Phillips separating them, as Buckingham Palace had planned.

  • Drunken bar patrons kept CMPD from helping gunshot victim. State yanks liquor permit

    ‘Intoxicated’ and ‘uncooperative’ crowd blocked and injured police officers, NC Law Enforcement Division says.

  • Alison Brie and Dave Franco spent early pandemic days sleeping in and eating too much before finding a routine that helped their relationship thrive

    The actress told Insider that self-care was a key component for the couple in keeping a strong relationship while they were stuck in their house.

  • Elon Musk says Starlink should be 'fully mobile' by the end of 2021, allowing customers to use it at any address or in moving vehicles

    Elon Musk said Friday that Starlink users should be able to move their satellite internet hardware between addresses by the end of the year.

  • Prince Philip's great niece Princess Xenia of Hohenlohe-Langenburg: 'He was an idol to us'

    The historic family ties that prompted The Queen to invite German royalty Follow live updates from Prince Philip's funeral The Duke of Edinburgh's great niece, whose brother is in Windsor for his funeral on Saturday, has remembered Prince Philip as an "idol" for the younger generation of their family. Speaking from Munich, Princess Xenia of Hohenlohe-Langenburg said the Duke was a powerful role model to her and his "selflessness, lack of ego and sense of humour" will never be forgotten. Her tribute comes as the Queen prepares to say farewell to her husband of 73 years at Windsor Castle. "To all of us, he was an idol, he was somebody to look up to, we had enormous respect for him and it was always very exciting when he came to visit, and he came often," said Princess Xenia of Hohenlohe-Langenburg. "And this has become clear to me in the week since he's died - the way he lived his life, his motto, which was an unwritten motto for us, this discipline, this selflessness, this lack of ego, but also his sense of humour always underlying all of that.

  • Australian SailGP team capsizes US boat during training

    Skipper Tom Slingsby and the defending SailGP champion Australian crew capsized the U.S. team’s foiling 50-foot catamaran on Bermuda’s Great Sound on Friday during its first training session for the global tour’s season opener. Slingsby said there were only minor injuries and the boat was quickly righted before being towed back to base. U.S. skipper Jimmy Spithill said there was enough damage that the high-tech boat could be out of action for a few days.

  • Photos of the Queen at Prince Harry's wedding and Prince Philip's funeral - held at the same venue - highlight the impact of her loss

    The Queen attended Prince Harry's wedding at the same chapel where Prince Philip's funeral was. Photos from the events emphasize her loss.

  • Number of COVID-19 patients in French intensive care falls again

    PARIS (Reuters) -The number of coronavirus patients in intensive care units in France has fallen and the number of patients in hospital has also dropped, the health ministry said on Saturday, in a sign that pressure on the medical system is easing. Health ministry data showed that 5,877 people were in intensive care units with COVID-19 on Saturday, 37 fewer than on Friday. France imposed a third nationwide lockdown this month to try to stem its third wave of infections.