Zhejiang Chint Electrics Co., Ltd. (SHSE:601877), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SHSE over the last few months, increasing to CN¥23.63 at one point, and dropping to the lows of CN¥18.96. 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 Zhejiang Chint Electrics' current trading price of CN¥18.96 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 Zhejiang Chint Electrics'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 Zhejiang Chint Electrics

What's The Opportunity In Zhejiang Chint Electrics?

Good news, investors! Zhejiang Chint Electrics 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 10.53x is currently well-below the industry average of 29.55x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Zhejiang Chint Electrics'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 kind of growth will Zhejiang Chint Electrics generate?

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 67% over the next couple of years, the future seems bright for Zhejiang Chint Electrics. 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 601877 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 601877 for a while, now might be the time to make a leap. Its buoyant future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 601877. 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.

So while earnings quality is important, it's equally important to consider the risks facing Zhejiang Chint Electrics at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Zhejiang Chint Electrics.

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 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.