Should You Investigate Bethel Automotive Safety Systems Co., Ltd (SHSE:603596) At CN¥50.28?

Bethel Automotive Safety Systems Co., Ltd (SHSE:603596), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SHSE. The company is inching closer to its yearly highs following the recent share price climb. 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. However, what if the stock is still a bargain? Let’s take a look at Bethel Automotive Safety Systems’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See 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 28.38x is trading slightly below its industry peers’ ratio of 32.29x, 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 kind of growth will Bethel Automotive Safety Systems generate?

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. Bethel Automotive Safety Systems' earnings over the next few years are expected to increase by 64%, 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 an eye on 603596, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast 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 while earnings quality is important, it's equally important to consider the risks facing Bethel Automotive Safety Systems at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Bethel Automotive Safety Systems.

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.