At CN¥118, Is It Time To Put Huizhou Desay SV Automotive Co., Ltd. (SZSE:002920) On Your Watch List?

While Huizhou Desay SV Automotive Co., Ltd. (SZSE:002920) might not have the largest market cap around , it saw a significant share price rise of 47% in the past couple of months on the SZSE. 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 mid-cap 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 examine Huizhou Desay SV Automotive’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Huizhou Desay SV Automotive

What Is Huizhou Desay SV Automotive Worth?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 40.91x is currently well-above the industry average of 28.35x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that Huizhou Desay SV Automotive’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Huizhou Desay SV Automotive?

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. Huizhou Desay SV Automotive's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in 002920’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 002920 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 002920 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 002920, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Huizhou Desay SV Automotive, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for Huizhou Desay SV Automotive (1 is potentially serious!) that we believe deserve your full attention.

If you are no longer interested in Huizhou Desay SV Automotive, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.