At CN¥16.34, Is It Time To Put Guangdong Xinbao Electrical Appliances Holdings Co., Ltd (SZSE:002705) On Your Watch List?

While Guangdong Xinbao Electrical Appliances Holdings Co., Ltd (SZSE:002705) might not have the largest market cap around , it saw a decent share price growth of 12% on the SZSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Guangdong Xinbao Electrical Appliances Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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Is Guangdong Xinbao Electrical Appliances Holdings Still Cheap?

Great news for investors – Guangdong Xinbao Electrical Appliances Holdings is still trading at a fairly cheap price according to our price multiple model, where we compare 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 Guangdong Xinbao Electrical Appliances Holdings’s ratio of 12.63x is below its peer average of 26.71x, which indicates the stock is trading at a lower price compared to the Consumer Durables industry. Guangdong Xinbao Electrical Appliances Holdings’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.

See our latest analysis for Guangdong Xinbao Electrical Appliances Holdings

What kind of growth will Guangdong Xinbao Electrical Appliances Holdings generate?

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. Guangdong Xinbao Electrical Appliances Holdings' earnings over the next few years are expected to increase by 30%, 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? Since 002705 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 002705 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 002705. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 1 warning sign for Guangdong Xinbao Electrical Appliances Holdings and we think they deserve your attention.

If you are no longer interested in Guangdong Xinbao Electrical Appliances Holdings, 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.