While China Everbright Environment Group Limited (HKG:257) might not have the largest market cap around , it led the SEHK gainers with a relatively large price hike in the past couple of weeks. The company is now trading at yearly-high levels following the recent surge in its share price. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Let's examine China Everbright Environment Group's valuation and outlook in more detail to determine if there's still a bargain opportunity.
Is China Everbright Environment Group Still Cheap?
According to our valuation model, China Everbright Environment Group seems to be fairly priced at around 15% below our intrinsic value, which means if you buy China Everbright Environment Group today, you'd be paying a fair price for it. And if you believe the company's true value is HK$4.55, then there isn't much room for the share price grow beyond what it's currently trading. Furthermore, China Everbright Environment Group's low beta implies that the stock is less volatile than the wider market.
What does the future of China Everbright Environment Group look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of China Everbright Environment Group, it is expected to deliver a relatively unexciting earnings growth of 6.4%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in 257's future outlook, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you've been keeping an eye on 257, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.
If you'd like to know more about China Everbright Environment Group as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for China Everbright Environment Group (1 can't be ignored) you should be familiar with.
If you are no longer interested in China Everbright Environment Group, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com