At CN¥147, Is It Time To Put Zhejiang Cfmoto Power Co.,Ltd (SHSE:603129) On Your Watch List?

Zhejiang Cfmoto Power Co.,Ltd (SHSE:603129), might not be a large cap stock, but it saw a decent share price growth of 18% on the SHSE over the last few months. 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 mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Zhejiang Cfmoto PowerLtd’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Zhejiang Cfmoto PowerLtd

What's The Opportunity In Zhejiang Cfmoto PowerLtd?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Zhejiang Cfmoto PowerLtd’s ratio of 19.11x is trading slightly below its industry peers’ ratio of 21.52x, which means if you buy Zhejiang Cfmoto PowerLtd today, you’d be paying a decent price for it. And if you believe that Zhejiang Cfmoto PowerLtd should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that Zhejiang Cfmoto PowerLtd’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Zhejiang Cfmoto PowerLtd?

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 59% over the next couple of years, the future seems bright for Zhejiang Cfmoto PowerLtd. 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? 603129’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 603129? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 603129, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for 603129, 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 want to dive deeper into Zhejiang Cfmoto PowerLtd, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Zhejiang Cfmoto PowerLtd, and understanding this should be part of your investment process.

If you are no longer interested in Zhejiang Cfmoto PowerLtd, 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.