Zhejiang Chint Electrics Co., Ltd. (SHSE:601877) may not be a large-cap stock, but it has attracted a lot of attention due to a significant price movement on the SHSE over the past few months. The price rose to CNY21.98 at one point and then fell to a low of CNY17.09. Some price action can provide investors with a better opportunity to enter the stock and potentially buy it at a lower price. One question to answer is whether Zhejiang Chint Electrics’ current trading price of CNY17.13 reflects the true value of the mid-cap stock. Or is it currently undervalued, giving us a buying opportunity? Let’s take a look at Zhejiang Chint Electrics’ outlook and value based on the latest financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Zhejiang Chint Electrics
Is Zhejiang Chint Electrics still cheap?
Great news for investors – Zhejiang Chint Electrics is still trading at a relatively 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 case because there isn’t enough transparency to forecast cash flows. The ratio of 10.33x is currently well below the industry average of 25.69x, meaning the stock is trading cheaper relative to peers. However, since Zhejiang Chint Electrics stock is relatively volatile (i.e. price fluctuations are more pronounced relative to the rest of the market), this could mean the price could fall even further, giving us another buying opportunity in the future. This is based on the high beta, which is a good indicator of share price volatility.
Can we expect growth from Zhejiang Chint Electric?
Future prospects are an important consideration when you’re looking to buy stocks, especially if you’re an investor looking for growth for your portfolio. Buying a great company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Zhejiang Chint Electrics’ earnings are expected to grow 48% over the next few years, suggesting a very optimistic future. This should lead to more robust cash flows, resulting in a higher share value.
What this means for you
Are you a shareholder? With 601877 currently trading below the industry P/E, it could be a good time to buy more shares of this stock. With the optimistic earnings outlook on the horizon, this growth does not seem to be fully reflected in the share price yet. However, there are other factors to consider, such as the capital structure, which could explain the current price multiple.
Are you a potential investor? If you have been keeping an eye on 601877 for some time, now could be the right time to buy. The strong future earnings prospects are not yet fully reflected in the current share price, which means it is not too late to buy 601877. However, before making an investment decision, you should consider other factors such as the strength of the balance sheet to make an informed assessment.
So if you want to go deeper into this stock, it is important to consider all the risks it faces. A typical example: We discovered 2 warning signs for Zhejiang Chint Electrics You should be aware.
If you are no longer interested in Zhejiang Chint Electrics, you can use our free platform to see our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
