Shaanxi Zhongtian Rocket Technology Co., Ltd (SZSE:003009), 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¥46.05 at one point, and dropping to the lows of CN¥37.17. 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 Shaanxi Zhongtian Rocket Technology's current trading price of CN¥37.17 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 Shaanxi Zhongtian Rocket Technology's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

What Is Shaanxi Zhongtian Rocket Technology Worth?

Shaanxi Zhongtian Rocket Technology is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison 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 78.64x is currently well-above the industry average of 57.02x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that Shaanxi Zhongtian Rocket Technology'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 the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it's there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of Shaanxi Zhongtian Rocket Technology 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. 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. In Shaanxi Zhongtian Rocket Technology's case, its revenues over the next few years are expected to grow by 33%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 003009's optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 003009 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you've been keeping an eye on 003009 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 003009, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 1 warning sign for Shaanxi Zhongtian Rocket Technology you should know about.

If you are no longer interested in Shaanxi Zhongtian Rocket Technology, 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.