At CN¥181, Is It Time To Put Anhui Gujing Distillery Co., Ltd. (SZSE:000596) On Your Watch List?

Today we're going to take a look at the well-established Anhui Gujing Distillery Co., Ltd. (SZSE:000596). The company's stock received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥280 at one point, and dropping to the lows of CN¥178. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Anhui Gujing Distillery's current trading price of CN¥181 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Anhui Gujing Distillery’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Anhui Gujing Distillery

What Is Anhui Gujing Distillery Worth?

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 Anhui Gujing Distillery’s ratio of 18.77x is trading slightly below its industry peers’ ratio of 22.51x, which means if you buy Anhui Gujing Distillery today, you’d be paying a reasonable price for it. And if you believe that Anhui Gujing Distillery 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. Furthermore, it seems like Anhui Gujing Distillery’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Anhui Gujing Distillery look like?

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. With profit expected to grow by 71% over the next couple of years, the future seems bright for Anhui Gujing Distillery. 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? It seems like the market has already priced in 000596’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 000596? 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 an eye on 000596, 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 000596, 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.

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. Be aware that Anhui Gujing Distillery is showing 2 warning signs in our investment analysis and 1 of those is a bit concerning...

If you are no longer interested in Anhui Gujing Distillery, 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.