Guangdong Xinbao Electrical Appliances Holdings Co., Ltd (SZSE:002705), is not the largest company out there, but it saw significant share price movement during recent months on the SZSE, rising to highs of CN¥18.71 and falling to the lows of CN¥12.52. 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 Guangdong Xinbao Electrical Appliances Holdings' current trading price of CN¥12.66 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 Guangdong Xinbao Electrical Appliances Holdings's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

What Is Guangdong Xinbao Electrical Appliances Holdings Worth?

Great news for investors – Guangdong Xinbao Electrical Appliances Holdings is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. we find that Guangdong Xinbao Electrical Appliances Holdings's ratio of 10.24x is below its peer average of 17.61x, which indicates the stock is trading at a lower price compared to the Consumer Durables industry. Another thing to keep in mind is that Guangdong Xinbao Electrical Appliances Holdings'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 Guangdong Xinbao Electrical Appliances Holdings?

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. 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. With profit expected to grow by 28% over the next couple of years, the future seems bright for Guangdong Xinbao Electrical Appliances Holdings. 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 002705 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 002705 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 002705. 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 investment decision.

If you want to dive deeper into Guangdong Xinbao Electrical Appliances Holdings, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Guangdong Xinbao Electrical Appliances Holdings.

If you are no longer interested in Guangdong Xinbao Electrical Appliances Holdings, 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