Shandong Hualu-Hengsheng Chemical Co., Ltd. (SHSE:600426), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SHSE over the last few months, increasing to CN¥32.17 at one point, and dropping to the lows of CN¥24.29. 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 Shandong Hualu-Hengsheng Chemical's current trading price of CN¥25.28 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Shandong Hualu-Hengsheng Chemical'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 Shandong Hualu-Hengsheng Chemical
What Is Shandong Hualu-Hengsheng Chemical Worth?
Good news, investors! Shandong Hualu-Hengsheng Chemical is still a bargain right now according to our price multiple model, which compares 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 14.58x is currently well-below the industry average of 31.66x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Shandong Hualu-Hengsheng Chemical'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.
What does the future of Shandong Hualu-Hengsheng Chemical look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Shandong Hualu-Hengsheng Chemical's earnings over the next few years are expected to increase by 93%, 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 600426 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 financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on 600426 for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 600426. 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 investment decision.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've found that Shandong Hualu-Hengsheng Chemical has 3 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.
If you are no longer interested in Shandong Hualu-Hengsheng Chemical, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.