At CN¥21.10, Is Zhejiang Qianjiang Motorcycle Co., Ltd. (SZSE:000913) Worth Looking At Closely?

Zhejiang Qianjiang Motorcycle Co., Ltd. (SZSE:000913), might not be a large cap stock, but it led the SZSE gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Zhejiang Qianjiang Motorcycle’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Zhejiang Qianjiang Motorcycle

What's The Opportunity In Zhejiang Qianjiang Motorcycle?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Zhejiang Qianjiang Motorcycle’s ratio of 20.98x is trading slightly below its industry peers’ ratio of 24.79x, which means if you buy Zhejiang Qianjiang Motorcycle today, you’d be paying a reasonable price for it. And if you believe Zhejiang Qianjiang Motorcycle 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. Although, there may be an opportunity to buy in the future. This is because Zhejiang Qianjiang Motorcycle’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Zhejiang Qianjiang Motorcycle 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. With profit expected to grow by 42% over the next couple of years, the future seems bright for Zhejiang Qianjiang Motorcycle. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 000913’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 000913? 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 000913, 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 000913, 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Zhejiang Qianjiang Motorcycle you should know about.

If you are no longer interested in Zhejiang Qianjiang Motorcycle, 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.