Is It Time To Consider Buying Shanghai Jin Jiang International Hotels Co., Ltd. (SHSE:600754)?

Shanghai Jin Jiang International Hotels Co., Ltd. (SHSE:600754), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the SHSE. While good news for shareholders, the company has traded much higher in the past year. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Shanghai Jin Jiang International Hotels’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Shanghai Jin Jiang International Hotels

What's The Opportunity In Shanghai Jin Jiang International Hotels?

Great news for investors – Shanghai Jin Jiang International Hotels 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 Shanghai Jin Jiang International Hotels’s ratio of 26.4x is below its peer average of 49.95x, which indicates the stock is trading at a lower price compared to the Hospitality industry. However, given that Shanghai Jin Jiang International Hotels’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 Shanghai Jin Jiang International Hotels 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. With profit expected to grow by 33% over the next couple of years, the future seems bright for Shanghai Jin Jiang International Hotels. 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? Since 600754 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 600754 for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 600754. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

So while earnings quality is important, it's equally important to consider the risks facing Shanghai Jin Jiang International Hotels at this point in time. While conducting our analysis, we found that Shanghai Jin Jiang International Hotels has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in Shanghai Jin Jiang International Hotels, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.