Is Now The Time To Look At Buying Bafang Electric (Suzhou) Co.,Ltd. (SHSE:603489)?

While Bafang Electric (Suzhou) Co.,Ltd. (SHSE:603489) might not have the largest market cap around , it saw a decent share price growth of 20% 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. Less-covered, small caps sees 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? Let’s examine Bafang Electric (Suzhou)Ltd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Bafang Electric (Suzhou)Ltd

Is Bafang Electric (Suzhou)Ltd Still Cheap?

Bafang Electric (Suzhou)Ltd appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and 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 Bafang Electric (Suzhou)Ltd’s ratio of 60.75x is above its peer average of 21.97x, which suggests the stock is trading at a higher price compared to the Leisure industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Bafang Electric (Suzhou)Ltd’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Bafang Electric (Suzhou)Ltd generate?

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. Bafang Electric (Suzhou)Ltd's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 603489’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 603489 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 603489 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for 603489, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Bafang Electric (Suzhou)Ltd at this point in time. Be aware that Bafang Electric (Suzhou)Ltd is showing 3 warning signs in our investment analysis and 1 of those can't be ignored...

If you are no longer interested in Bafang Electric (Suzhou)Ltd, 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.