Today we're going to take a look at the well-established Chongqing Changan Automobile Company Limited (SZSE:000625). The company's stock received a lot of attention from a substantial price increase on the SZSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Chongqing Changan Automobile's outlook and valuation to see if the opportunity still exists.

View our latest analysis for Chongqing Changan Automobile

What Is Chongqing Changan Automobile Worth?

According to my valuation model, Chongqing Changan Automobile seems to be fairly priced at around 5.67% above my intrinsic value, which means if you buy Chongqing Changan Automobile today, you'd be paying a relatively fair price for it. And if you believe the company's true value is CN¥17.36, then there isn't really any room for the share price grow beyond what it's currently trading. Furthermore, Chongqing Changan Automobile's low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Chongqing Changan Automobile?

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. Though in the case of Chongqing Changan Automobile, it is expected to deliver a negative earnings growth of -6.3%, which doesn't help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? 000625 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you've been keeping an eye on 000625 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there's less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help crystalize your views on 000625 should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For instance, we've identified 3 warning signs for Chongqing Changan Automobile (1 is concerning) you should be familiar with.

If you are no longer interested in Chongqing Changan Automobile, 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.