At CN¥36.20, Is Bethel Automotive Safety Systems Co., Ltd (SHSE:603596) Worth Looking At Closely?

Bethel Automotive Safety Systems Co., Ltd (SHSE:603596), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SHSE over the last few months, increasing to CN¥46.35 at one point, and dropping to the lows of CN¥35.40. 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 Bethel Automotive Safety Systems' current trading price of CN¥36.20 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 Bethel Automotive Safety Systems’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Bethel Automotive Safety Systems

Is Bethel Automotive Safety Systems 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. 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 Bethel Automotive Safety Systems’s ratio of 23.63x is trading slightly below its industry peers’ ratio of 23.83x, which means if you buy Bethel Automotive Safety Systems today, you’d be paying a decent price for it. And if you believe that Bethel Automotive Safety Systems should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Bethel Automotive Safety Systems’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 Bethel Automotive Safety Systems 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. Bethel Automotive Safety Systems' earnings over the next few years are expected to increase by 68%, 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 603596’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 financial strength of the company. Have these factors changed since the last time you looked at 603596? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 603596, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 603596, which 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Bethel Automotive Safety Systems you should be mindful of and 1 of them is a bit concerning.

If you are no longer interested in Bethel Automotive Safety Systems, 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.