Geely Automobile Holdings Limited (HKG:175) saw significant share price movement during recent months on the SEHK, rising to highs of HK$9.80 and falling to the lows of HK$7.73. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Geely Automobile Holdings' current trading price of HK$8.08 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Geely Automobile Holdings's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Geely Automobile Holdings
What Is Geely Automobile Holdings Worth?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. We find that Geely Automobile Holdings's ratio of 14.51x is trading slightly above its industry peers' ratio of 13.67x, which means if you buy Geely Automobile Holdings today, you'd be paying a relatively sensible price for it. And if you believe that Geely Automobile Holdings should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. So, is there another chance to buy low in the future? Given that Geely Automobile Holdings's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Geely Automobile Holdings generate?
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. With profit expected to more than double over the next couple of years, the future seems bright for Geely Automobile Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? 175's optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 175? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you've been keeping an eye on 175, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 175, 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'd like to know more about Geely Automobile Holdings as a business, it's important to be aware of any risks it's facing. For example - Geely Automobile Holdings has 1 warning sign we think you should be aware of.
If you are no longer interested in Geely Automobile Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.