At CN¥5.87, Is Guangdong Dongpeng Holdings Co.,Ltd. (SZSE:003012) Worth Looking At Closely?

Guangdong Dongpeng Holdings Co.,Ltd. (SZSE:003012), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the SZSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today we will analyse the most recent data on Guangdong Dongpeng HoldingsLtd’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Guangdong Dongpeng HoldingsLtd

Is Guangdong Dongpeng HoldingsLtd Still Cheap?

Good news, investors! Guangdong Dongpeng HoldingsLtd is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 Guangdong Dongpeng HoldingsLtd’s ratio of 12.47x is below its peer average of 16.5x, which indicates the stock is trading at a lower price compared to the Building industry. However, given that Guangdong Dongpeng HoldingsLtd’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 Guangdong Dongpeng HoldingsLtd 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 38% over the next couple of years, the future seems bright for Guangdong Dongpeng HoldingsLtd. 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 003012 is currently trading below the industry PE ratio, it may be a great time to increase 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 003012 for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 003012. 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.

So while earnings quality is important, it's equally important to consider the risks facing Guangdong Dongpeng HoldingsLtd at this point in time. You'd be interested to know, that we found 1 warning sign for Guangdong Dongpeng HoldingsLtd and you'll want to know about it.

If you are no longer interested in Guangdong Dongpeng HoldingsLtd, 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.