Is Now The Time To Look At Buying Shanghai Aiko Solar Energy Co.,Ltd. (SHSE:600732)?

While Shanghai Aiko Solar Energy Co.,Ltd. (SHSE:600732) might not have the largest market cap around , it saw a decent share price growth of 18% on the SHSE 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. 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. However, what if the stock is still a bargain? Let’s take a look at Shanghai Aiko Solar EnergyLtd’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Shanghai Aiko Solar EnergyLtd

What's The Opportunity In Shanghai Aiko Solar EnergyLtd?

Great news for investors – Shanghai Aiko Solar EnergyLtd 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. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.85x is currently well-below the industry average of 54.55x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Shanghai Aiko Solar EnergyLtd’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Shanghai Aiko Solar EnergyLtd 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 88% over the next couple of years, the future seems bright for Shanghai Aiko Solar EnergyLtd. 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 600732 is currently trading below the industry PE ratio, it may be a great time to accumulate more of 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 600732 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 600732. 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.

So while earnings quality is important, it's equally important to consider the risks facing Shanghai Aiko Solar EnergyLtd at this point in time. Case in point: We've spotted 3 warning signs for Shanghai Aiko Solar EnergyLtd you should be mindful of and 1 of these is concerning.

If you are no longer interested in Shanghai Aiko Solar EnergyLtd, 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.