Why is Croda So Expensive?

VIDEO: Our new video series looks at stocks that look cheap or expensive - and why. This week it’s the turn of 1-star stock Croda

James Gard 12 July, 2021 | 10:48AM
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James Gard: Each week we look at one stock that is cheap or expensive and why. Today let's look at Croda, a chemicals company that makes ingredients for medicines and personal care products like perfumes and anti-wrinkle creams. Why do Morningstar analysts think the shares, which have risen 42% in the last year, are overvalued? They think that Croda has been slow to develop its business in emerging markets, a high growth area. It's also bought rival companies at too high prices. It's price earnings ratio of nearly 50 is high even for the in- favour chemicals industry. Still Morningstar analysts welcome a plan to sell off lesser performing parts of the business. Currently Croda's fair value is £46 per share but it is trading around £76.

For Morningstar I'm James Gard.

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James Gard  is content editor for Morningstar.co.uk