When Should You Buy Sichuan Kexin Mechanical and Electrical Equipment Co.,Ltd (SZSE:300092)?

While Sichuan Kexin Mechanical and Electrical Equipment Co.,Ltd (SZSE:300092) might not have the largest market cap around , it saw a significant share price rise of 23% 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. 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 Sichuan Kexin Mechanical and Electrical EquipmentLtd’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Sichuan Kexin Mechanical and Electrical EquipmentLtd

What Is Sichuan Kexin Mechanical and Electrical EquipmentLtd Worth?

Good news, investors! Sichuan Kexin Mechanical and Electrical EquipmentLtd 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. 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 16.67x is currently well-below the industry average of 29.07x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Sichuan Kexin Mechanical and Electrical EquipmentLtd’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.

Can we expect growth from Sichuan Kexin Mechanical and Electrical EquipmentLtd?

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. With profit expected to grow by 70% over the next couple of years, the future seems bright for Sichuan Kexin Mechanical and Electrical EquipmentLtd. 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 300092 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 300092 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 300092. 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.

So while earnings quality is important, it's equally important to consider the risks facing Sichuan Kexin Mechanical and Electrical EquipmentLtd at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Sichuan Kexin Mechanical and Electrical EquipmentLtd (including 1 which is significant).

If you are no longer interested in Sichuan Kexin Mechanical and Electrical EquipmentLtd, 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.