When Should You Buy ShenZhen Woer Heat-Shrinkable Material Co.,Ltd. (SZSE:002130)?

While ShenZhen Woer Heat-Shrinkable Material Co.,Ltd. (SZSE:002130) might not have the largest market cap around , it saw a decent share price growth of 11% on the SZSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a CN¥17b market cap stock, it seems odd ShenZhen Woer Heat-Shrinkable MaterialLtd is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, 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 ShenZhen Woer Heat-Shrinkable MaterialLtd’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for ShenZhen Woer Heat-Shrinkable MaterialLtd

What's The Opportunity In ShenZhen Woer Heat-Shrinkable MaterialLtd?

Great news for investors – ShenZhen Woer Heat-Shrinkable MaterialLtd 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 22.08x is currently well-below the industry average of 27.9x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, ShenZhen Woer Heat-Shrinkable MaterialLtd’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will ShenZhen Woer Heat-Shrinkable MaterialLtd generate?

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 81% over the next couple of years, the future seems bright for ShenZhen Woer Heat-Shrinkable MaterialLtd. 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 002130 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 002130 for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 002130. 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 assessment.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 2 warning signs for ShenZhen Woer Heat-Shrinkable MaterialLtd (1 is potentially serious!) that we believe deserve your full attention.

If you are no longer interested in ShenZhen Woer Heat-Shrinkable MaterialLtd, 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.