Lianhe Chemical Technology Co.,Ltd. (SZSE:002250), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥10.57 at one point, and dropping to the lows of CN¥7.87. 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 Lianhe Chemical TechnologyLtd's current trading price of CN¥7.88 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 Lianhe Chemical TechnologyLtd's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Lianhe Chemical TechnologyLtd
What Is Lianhe Chemical TechnologyLtd Worth?
Great news for investors – Lianhe Chemical TechnologyLtd is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. I find that Lianhe Chemical TechnologyLtd's ratio of 14.07x is below its peer average of 32.4x, which indicates the stock is trading at a lower price compared to the Chemicals industry. Another thing to keep in mind is that Lianhe Chemical TechnologyLtd'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.
Can we expect growth from Lianhe Chemical TechnologyLtd?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Lianhe Chemical TechnologyLtd's earnings over the next few years are expected to increase by 41%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since 002250 is currently trading below the industry PE ratio, it may be a great time to accumulate more of 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 002250 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 002250. 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. You'd be interested to know, that we found 3 warning signs for Lianhe Chemical TechnologyLtd and you'll want to know about them.
If you are no longer interested in Lianhe Chemical TechnologyLtd, 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.
