Is Shannon Semiconductor Technology Co.,Ltd. (SZSE:300475) Potentially Undervalued?

While Shannon Semiconductor Technology Co.,Ltd. (SZSE:300475) 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¥35.50 at one point, and dropping to the lows of CN¥23.11. 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 Shannon Semiconductor TechnologyLtd's current trading price of CN¥23.11 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 Shannon Semiconductor TechnologyLtd’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Shannon Semiconductor TechnologyLtd

What's The Opportunity In Shannon Semiconductor TechnologyLtd?

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 29.58x is currently trading slightly above its industry peers’ ratio of 25.77x, which means if you buy Shannon Semiconductor TechnologyLtd today, you’d be paying a relatively reasonable price for it. And if you believe that Shannon Semiconductor TechnologyLtd should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like Shannon Semiconductor TechnologyLtd’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Shannon Semiconductor TechnologyLtd?

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. Shannon Semiconductor TechnologyLtd's earnings over the next few years are expected to increase by 46%, 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? 300475’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 track record of its management team. Have these factors changed since the last time you looked at 300475? 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 300475, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 300475, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Shannon Semiconductor TechnologyLtd you should be mindful of and 1 of these is concerning.

If you are no longer interested in Shannon Semiconductor 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.