What Does Shanghai Kelai Mechatronics Engineering Co.,Ltd.'s (SHSE:603960) Share Price Indicate?

While Shanghai Kelai Mechatronics Engineering Co.,Ltd. (SHSE:603960) might not have the largest market cap around , it saw a decent share price growth of 14% on the SHSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Shanghai Kelai Mechatronics EngineeringLtd’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Shanghai Kelai Mechatronics EngineeringLtd

What's The Opportunity In Shanghai Kelai Mechatronics EngineeringLtd?

The stock is currently trading at CN¥18.92 on the share market, which means it is overvalued by 24% compared to our intrinsic value of CN¥15.24. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Shanghai Kelai Mechatronics EngineeringLtd’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.

What kind of growth will Shanghai Kelai Mechatronics EngineeringLtd generate?

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. With profit expected to grow by 78% over the next year, the near-term future seems bright for Shanghai Kelai Mechatronics EngineeringLtd. 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? 603960’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 603960 should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 tabs on 603960 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 603960, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Shanghai Kelai Mechatronics EngineeringLtd, 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.