Is There Now An Opportunity In CIMC Vehicles (Group) Co., Ltd. (SZSE:301039)?

CIMC Vehicles (Group) Co., Ltd. (SZSE:301039), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥10.81 at one point, and dropping to the lows of CN¥8.95. 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 CIMC Vehicles (Group)'s current trading price of CN¥9.57 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CIMC Vehicles (Group)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for CIMC Vehicles (Group)

What Is CIMC Vehicles (Group) Worth?

Good news, investors! CIMC Vehicles (Group) 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 CIMC Vehicles (Group)’s ratio of 8.62x is below its peer average of 27.09x, which indicates the stock is trading at a lower price compared to the Machinery industry. CIMC Vehicles (Group)’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of CIMC Vehicles (Group) 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for CIMC Vehicles (Group), at least in the near future.

What This Means For You

Are you a shareholder? Although 301039 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to 301039, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on 301039 for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 1 warning sign with CIMC Vehicles (Group), and understanding it should be part of your investment process.

If you are no longer interested in CIMC Vehicles (Group), 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.