What Is Shaanxi Zhongtian Rocket Technology Co., Ltd's (SZSE:003009) Share Price Doing?

While Shaanxi Zhongtian Rocket Technology Co., Ltd (SZSE:003009) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥43.68 at one point, and dropping to the lows of CN¥34.60. 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 Shaanxi Zhongtian Rocket Technology's current trading price of CN¥37.68 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Shaanxi Zhongtian Rocket Technology’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 Shaanxi Zhongtian Rocket Technology

Is Shaanxi Zhongtian Rocket Technology Still Cheap?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Shaanxi Zhongtian Rocket Technology’s ratio of 70.21x is trading slightly above its industry peers’ ratio of 62.24x, which means if you buy Shaanxi Zhongtian Rocket Technology today, you’d be paying a relatively sensible price for it. And if you believe Shaanxi Zhongtian Rocket Technology should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, Shaanxi Zhongtian Rocket Technology’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Shaanxi Zhongtian Rocket Technology look like?

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. Shaanxi Zhongtian Rocket Technology's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 003009’s positive outlook, with shares trading around industry price multiples. 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 003009? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 003009, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 003009, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Shaanxi Zhongtian Rocket Technology at this point in time. At Simply Wall St, we found 1 warning sign for Shaanxi Zhongtian Rocket Technology and we think they deserve your attention.

If you are no longer interested in Shaanxi Zhongtian Rocket Technology, 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.