At CN¥48.25, Is It Time To Put Zhejiang Dingli Machinery Co.,Ltd (SHSE:603338) On Your Watch List?

Zhejiang Dingli Machinery Co.,Ltd (SHSE:603338), is not the largest company out there, but it saw significant share price movement during recent months on the SHSE, rising to highs of CN¥64.19 and falling to the lows of CN¥45.52. 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 Zhejiang Dingli MachineryLtd's current trading price of CN¥48.25 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 Zhejiang Dingli MachineryLtd’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Zhejiang Dingli MachineryLtd

What Is Zhejiang Dingli MachineryLtd Worth?

According to our valuation model, Zhejiang Dingli MachineryLtd seems to be fairly priced at around 11% below our intrinsic value, which means if you buy Zhejiang Dingli MachineryLtd today, you’d be paying a fair price for it. And if you believe that the stock is really worth CN¥54.27, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Zhejiang Dingli MachineryLtd’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 kind of growth will Zhejiang Dingli MachineryLtd generate?

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. Zhejiang Dingli MachineryLtd's earnings over the next few years are expected to increase by 45%, 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? 603338’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 603338, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Zhejiang Dingli MachineryLtd has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Zhejiang Dingli MachineryLtd, 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.