Shenzhen Kedali Industry Co., Ltd. (SZSE:002850), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the SZSE. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. But what if there is still an opportunity to buy? Let's take a look at Shenzhen Kedali Industry's outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Shenzhen Kedali Industry
What Is Shenzhen Kedali Industry Worth?
Good news, investors! Shenzhen Kedali Industry is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. I find that Shenzhen Kedali Industry's ratio of 21.74x is below its peer average of 39.39x, which indicates the stock is trading at a lower price compared to the Auto Components industry. Shenzhen Kedali Industry's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Shenzhen Kedali Industry?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. With profit expected to grow by 75% over the next couple of years, the future seems bright for Shenzhen Kedali Industry. 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? Since 002850 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on 002850 for a while, now might be the time to make a leap. Its prosperous future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 002850. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Shenzhen Kedali Industry (including 1 which is a bit concerning).
If you are no longer interested in Shenzhen Kedali Industry, 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.