While Hubei Yihua Chemical Industry Co., Ltd. (SZSE:000422) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥11.09 at one point, and dropping to the lows of CN¥8.86. 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 Hubei Yihua Chemical Industry's current trading price of CN¥9.42 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 Hubei Yihua Chemical Industry'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 Hubei Yihua Chemical Industry

What Is Hubei Yihua Chemical Industry Worth?

Good news, investors! Hubei Yihua Chemical Industry 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. 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 Hubei Yihua Chemical Industry's ratio of 24.68x is below its peer average of 32.61x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What's more interesting is that, Hubei Yihua Chemical Industry's share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Hubei Yihua Chemical Industry?

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. With profit expected to grow by 82% over the next year, the near-term future seems bright for Hubei Yihua Chemical Industry. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since 000422 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 000422 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 000422. 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 5 warning signs with Hubei Yihua Chemical Industry, and understanding these should be part of your investment process.

If you are no longer interested in Hubei Yihua Chemical 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.