While Shanghai Huace Navigation Technology Ltd (SZSE:300627) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the SZSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Let's take a look at Shanghai Huace Navigation Technology's outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Shanghai Huace Navigation Technology

What's the opportunity in Shanghai Huace Navigation Technology?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 44.61x is currently trading slightly above its industry peers' ratio of 39.73x, which means if you buy Shanghai Huace Navigation Technology today, you'd be paying a relatively reasonable price for it. And if you believe that Shanghai Huace Navigation Technology should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, Shanghai Huace Navigation Technology's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Shanghai Huace Navigation Technology look like?

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 grow by 83% over the next couple of years, the future seems bright for Shanghai Huace Navigation Technology. 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? It seems like the market has already priced in 300627's positive outlook, 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 300627? 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 300627, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 300627, 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 4 warning signs for Shanghai Huace Navigation Technology you should be mindful of and 1 of these can't be ignored.

If you are no longer interested in Shanghai Huace Navigation Technology, 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.