Shandong Linglong Tyre Co.,Ltd. (SHSE:601966), is not the largest company out there, but it saw significant share price movement during recent months on the SHSE, rising to highs of CN¥21.74 and falling to the lows of CN¥17.83. 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 Shandong Linglong TyreLtd's current trading price of CN¥17.83 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 Shandong Linglong TyreLtd'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 Shandong Linglong TyreLtd

What's The Opportunity In Shandong Linglong TyreLtd?

Great news for investors – Shandong Linglong TyreLtd 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 Shandong Linglong TyreLtd's ratio of 25.23x is below its peer average of 35.95x, which indicates the stock is trading at a lower price compared to the Auto Components industry. Shandong Linglong TyreLtd's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range.

What does the future of Shandong Linglong TyreLtd look like?

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. Shandong Linglong TyreLtd's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since 601966 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 financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you've been keeping an eye on 601966 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 601966. 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 assessment.

Diving deeper into the forecasts for Shandong Linglong TyreLtd mentioned earlier will help you understand how analysts view the stock going forward. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

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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.