While Jiangsu Changhai Composite Materials Co., Ltd (SZSE:300196) might not have the largest market cap around , it saw significant share price movement during recent months on the SZSE, rising to highs of CN¥13.65 and falling to the lows of CN¥9.62. 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 Jiangsu Changhai Composite Materials' current trading price of CN¥9.70 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Jiangsu Changhai Composite Materials's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Jiangsu Changhai Composite Materials
Is Jiangsu Changhai Composite Materials Still Cheap?
Great news for investors – Jiangsu Changhai Composite Materials is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We'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 7.88x is currently well-below the industry average of 30.42x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Jiangsu Changhai Composite Materials's share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Jiangsu Changhai Composite Materials?
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. Jiangsu Changhai Composite Materials' earnings over the next few years are expected to increase by 31%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since 300196 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic 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 300196 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 300196. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
If you'd like to know more about Jiangsu Changhai Composite Materials as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Jiangsu Changhai Composite Materials has 1 warning sign and it would be unwise to ignore it.
If you are no longer interested in Jiangsu Changhai Composite Materials, 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.