Logistics, contracting, realty keep UAE stocks markets attractive
Logistics services topped with a low P/E ratio of 6.65 times; followed by the realty sector at 9.85 times on a year-long basis
The UAE stock markets have maintained their competitive edge in the Gulf and Middle East region during the past year, as the average price-to-earnings ratio (P/E ratio) stood at a steep 12.43 times on a 12-month basis, according to the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM) statistics.
Logistics and transport services topped the list of most attractive platforms, with a low P/E ratio of 6.65 times; followed by the contracting sector at 7.35 times; and the realty sector at 9.85 times on a year-long basis.
The P/E ratio is calculated as a stock’s current share price divided by its earnings per share (EPS) for a twelve-month period. Most of the P/E ratios for publicly traded stocks are an expression of the stock’s current price compared with its previous 12 months’ earnings.
A low P/E ratio is usually indicative of value stocks, as it shows that the stock price trade lower in relation to the sector’s fundamentals, which in turn attracts investors due to the possibility of a profit at higher stock prices.
The most popular metric of stock analysis, the P/E Ratio is often used by long-term investors – along with the dividend yield – as asset allocation signals.
According to the state-run news agency, Wam, UAE stocks are expected to lure more investors and facilitate more capital inflows to the market in 2020, on the back of significant dividends announced by listed companies for their shareholders.
Construction Week reported in March 2020 that Abu Dhabi Securities Market-listed (ADX) real estate developer Aldar Properties’ shareholders have approved the recommendation of the company's board of directors to offer $310.37m (AED1.14bn) in cash dividends at 14.5 fils per share for the financial year ending 31 December, 2019.
Similarly, Dubai Financial Market-listed (DFM) real estate developer Emaar Properties approved a 15% dividend worth $290m (AED1.1bn) in April 2019, after noting a 39% surge in its 2018 profits.