Should You Buy Cimic Group Ltd at This Share Price?

What happened to the CIM share price?

Cimic Group Ltd [ASX:CIM] traded higher again today. The broader market was up following improvements on overseas markets overnight. China’s lower expansion on the service side tempered gains in some Asian markets. However, the overall sentiment surrounding oil and global equities have been positive this week.

Why did CIM shares do this?

CIM is one of the best performing momentum stocks in the Aussie market over the past 26 weeks. Its consistent performance this week continues to make it a good choice for investors.

The company’s fundamentals are fairly strong with some areas needing improvements. The company has an average rating of ‘Hold’. However, market analysts see rising top-line and bottom-line in 2016 and 2017. The company moves with the market but has a larger than 1 beta. That means it moves more than the market does.

It has reasonable P/E multiples, at 20.63 times. It pays a good dividend, at 3.03% (yield). Its payout ratio is more than 60%. The company is relatively liquid with a more than 1 current ratio. It is not terribly leveraged. However, it can do with more interest coverage. The company can also benefit from a ‘fatter’ margin.

What now for CIM?

CIM is currently on my trading portfolio this week. The positive performance from the company this week can be a result of the broader market doing better. I tend to watch momentum stocks very carefully. The positive outlook for the company’s results is encouraging, but that is no promise for consistent stock price appreciation in the future. I recommend investors remain agile.

Ken Wangdong

Emerging Market Analyst, New Frontier Investor

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