Zhejiang Jinke Tom Culture Industry Co., LTD. (SZSE:300459), is not the largest company out there, but it led the SZSE gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. As a CN¥18b market-cap stock, it seems odd Zhejiang Jinke Tom Culture Industry is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let's take a look at Zhejiang Jinke Tom Culture Industry's outlook and value based on the most recent financial data to see if the opportunity still exists.
What's The Opportunity In Zhejiang Jinke Tom Culture Industry?
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 Zhejiang Jinke Tom Culture Industry's ratio of 73.68x is trading slightly above its industry peers' ratio of 61.78x, which means if you buy Zhejiang Jinke Tom Culture Industry today, you'd be paying a relatively sensible price for it. And if you believe that Zhejiang Jinke Tom Culture Industry should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like Zhejiang Jinke Tom Culture Industry's share price is quite stable, which could mean there may be less chances to buy low in the future now that it's trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Zhejiang Jinke Tom Culture 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. Zhejiang Jinke Tom Culture Industry's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? 300459'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 financial strength of the company. Have these factors changed since the last time you looked at 300459? 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 300459, 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 300459, 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.
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 - Zhejiang Jinke Tom Culture Industry has 1 warning sign we think you should be aware of.
If you are no longer interested in Zhejiang Jinke Tom Culture 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.