At CN¥63.77, Is Shenzhen Inovance Technology Co.,Ltd (SZSE:300124) Worth Looking At Closely?

Today we're going to take a look at the well-established Shenzhen Inovance Technology Co.,Ltd (SZSE:300124). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the SZSE. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Shenzhen Inovance TechnologyLtd’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Shenzhen Inovance TechnologyLtd

What Is Shenzhen Inovance TechnologyLtd Worth?

The share price seems sensible at the moment 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 35.49x is currently trading slightly above its industry peers’ ratio of 31.42x, which means if you buy Shenzhen Inovance TechnologyLtd today, you’d be paying a relatively reasonable price for it. And if you believe that Shenzhen Inovance TechnologyLtd should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Shenzhen Inovance TechnologyLtd’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Shenzhen Inovance TechnologyLtd look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Shenzhen Inovance TechnologyLtd's earnings over the next few years are expected to increase by 74%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 300124’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at 300124? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on 300124, 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 300124, 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.

If you'd like to know more about Shenzhen Inovance TechnologyLtd as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Shenzhen Inovance TechnologyLtd you should know about.

If you are no longer interested in Shenzhen Inovance TechnologyLtd, 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.