Is Now The Time To Look At Buying Hebei Huatong Wires and Cables Group Co., Ltd. (SHSE:605196)?

While Hebei Huatong Wires and Cables Group Co., Ltd. (SHSE:605196) might not have the largest market cap around , it led the SHSE gainers with a relatively large price hike in the past couple of weeks. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. Less-covered, small caps tend to present 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? Today we will analyse the most recent data on Hebei Huatong Wires and Cables Group’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Hebei Huatong Wires and Cables Group

Is Hebei Huatong Wires and Cables Group Still Cheap?

Great news for investors – Hebei Huatong Wires and Cables Group is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. 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 21.97x is currently well-below the industry average of 41.94x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Hebei Huatong Wires and Cables Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Hebei Huatong Wires and Cables Group look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 40% over the next year, the near-term future seems bright for Hebei Huatong Wires and Cables Group. 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? Since 605196 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 605196 for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 605196. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Hebei Huatong Wires and Cables Group, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Hebei Huatong Wires and Cables Group and you'll want to know about them.

If you are no longer interested in Hebei Huatong Wires and Cables Group, 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.