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
Facebook Twitter LinkedIn



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.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

James Gard  is content editor for Morningstar.co.uk