Is There Now An Opportunity In Changzhou Xingyu Automotive Lighting Systems Co.,Ltd. (SHSE:601799)?

While Changzhou Xingyu Automotive Lighting Systems Co.,Ltd. (SHSE:601799) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the SHSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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 take a look at Changzhou Xingyu Automotive Lighting SystemsLtd’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Changzhou Xingyu Automotive Lighting SystemsLtd

Is Changzhou Xingyu Automotive Lighting SystemsLtd Still Cheap?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio 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 31.64x is currently trading slightly below its industry peers’ ratio of 32.71x, which means if you buy Changzhou Xingyu Automotive Lighting SystemsLtd today, you’d be paying a decent price for it. And if you believe Changzhou Xingyu Automotive Lighting SystemsLtd should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, Changzhou Xingyu Automotive Lighting SystemsLtd’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Changzhou Xingyu Automotive Lighting SystemsLtd look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Changzhou Xingyu Automotive Lighting SystemsLtd's earnings over the next few years are expected to increase by 70%, 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? It seems like the market has already priced in 601799’s positive outlook, with shares trading around industry price multiples. 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 601799? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 601799, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 601799, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Diving deeper into the forecasts for Changzhou Xingyu Automotive Lighting SystemsLtd mentioned earlier will help you understand how analysts view the stock going forward. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Changzhou Xingyu Automotive Lighting SystemsLtd, 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.