Is It Time To Consider Buying Shaanxi Lighte Optoelectronics Material Co.,Ltd (SHSE:688150)?

While Shaanxi Lighte Optoelectronics Material Co.,Ltd (SHSE:688150) might not have the largest market cap around , it led the SHSE gainers with a relatively large price hike in the past couple of weeks. 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 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 examine Shaanxi Lighte Optoelectronics MaterialLtd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Shaanxi Lighte Optoelectronics MaterialLtd

What Is Shaanxi Lighte Optoelectronics MaterialLtd Worth?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 57.71x is currently trading slightly below its industry peers’ ratio of 60.74x, which means if you buy Shaanxi Lighte Optoelectronics MaterialLtd today, you’d be paying a decent price for it. And if you believe that Shaanxi Lighte Optoelectronics MaterialLtd 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. So, is there another chance to buy low in the future? Given that Shaanxi Lighte Optoelectronics MaterialLtd’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Shaanxi Lighte Optoelectronics MaterialLtd?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 more than double over the next couple of years, the future seems bright for Shaanxi Lighte Optoelectronics MaterialLtd. 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 688150’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 688150? 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 688150, 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 688150, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Shaanxi Lighte Optoelectronics MaterialLtd at this point in time. In terms of investment risks, we've identified 1 warning sign with Shaanxi Lighte Optoelectronics MaterialLtd, and understanding this should be part of your investment process.

If you are no longer interested in Shaanxi Lighte Optoelectronics MaterialLtd, 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.