ShenZhen Woer Heat-Shrinkable Material Co.,Ltd. (SZSE:002130), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥16.90 at one point, and dropping to the lows of CN¥12.45. 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 ShenZhen Woer Heat-Shrinkable MaterialLtd's current trading price of CN¥13.64 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 ShenZhen Woer Heat-Shrinkable MaterialLtd's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is ShenZhen Woer Heat-Shrinkable MaterialLtd Worth?
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. 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 20.56x is currently trading slightly below its industry peers' ratio of 25.45x, which means if you buy ShenZhen Woer Heat-Shrinkable MaterialLtd today, you'd be paying a decent price for it. And if you believe that ShenZhen Woer Heat-Shrinkable MaterialLtd should be trading at this level in the long run, then there's not much of an upside to gain over and above other industry peers. In addition to this, it seems like ShenZhen Woer Heat-Shrinkable MaterialLtd'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 ShenZhen Woer Heat-Shrinkable MaterialLtd?
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 couple of years, the future seems bright for ShenZhen Woer Heat-Shrinkable MaterialLtd. 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? It seems like the market has already priced in 002130's positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 002130? 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 002130, 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 002130, 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, we've found that ShenZhen Woer Heat-Shrinkable MaterialLtd has 2 warning signs (1 shouldn't be ignored!) that deserve your attention before going any further with your analysis.
If you are no longer interested in ShenZhen Woer Heat-Shrinkable MaterialLtd, 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.
