Should You Think About Buying Chongqing Changan Automobile Company Limited (SZSE:000625) Now?

Chongqing Changan Automobile Company Limited (SZSE:000625) led the SZSE gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. As a large-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 Chongqing Changan Automobile’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Chongqing Changan Automobile

Is Chongqing Changan Automobile Still Cheap?

Good news, investors! Chongqing Changan Automobile is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is CN¥23.84, but it is currently trading at CN¥17.95 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Chongqing Changan Automobile’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Chongqing Changan Automobile 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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Chongqing Changan Automobile, at least in the near future.

What This Means For You

Are you a shareholder? Although 000625 is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to 000625, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on 000625 for a while, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 2 warning signs for Chongqing Changan Automobile (1 makes us a bit uncomfortable!) and we strongly recommend you look at these before investing.

If you are no longer interested in Chongqing Changan Automobile, 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.