Is Now An Opportune Moment To Examine Xueda (Xiamen) Education Technology Group Co., Ltd (SZSE:000526)?

Xueda (Xiamen) Education Technology Group Co., Ltd (SZSE:000526), is not the largest company out there, but it saw a significant share price rise of 20% in the past couple of months on the SZSE. While good news for shareholders, the company has traded much higher in the past year. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Xueda (Xiamen) Education Technology Group’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Xueda (Xiamen) Education Technology Group

What's The Opportunity In Xueda (Xiamen) Education Technology Group?

The share price seems sensible at the moment 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 Xueda (Xiamen) Education Technology Group’s ratio of 31.07x is trading slightly below its industry peers’ ratio of 36.15x, which means if you buy Xueda (Xiamen) Education Technology Group today, you’d be paying a reasonable price for it. And if you believe Xueda (Xiamen) Education Technology Group should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, Xueda (Xiamen) Education Technology Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Xueda (Xiamen) Education Technology Group?

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. Xueda (Xiamen) Education Technology Group's earnings over the next few years are expected to increase by 71%, 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? It seems like the market has already priced in 000526’s positive outlook, 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 000526? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 000526, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 000526, 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.

It can be quite valuable to consider what analysts expect for Xueda (Xiamen) Education Technology Group from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Xueda (Xiamen) Education Technology 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.