At CN¥36.01, Is It Time To Put Shenzhen JPT Opto-Electronics Co., Ltd. (SHSE:688025) On Your Watch List?

While Shenzhen JPT Opto-Electronics Co., Ltd. (SHSE:688025) might not have the largest market cap around , it saw significant share price movement during recent months on the SHSE, rising to highs of CN¥50.25 and falling to the lows of CN¥36.01. 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 Shenzhen JPT Opto-Electronics' current trading price of CN¥36.01 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Shenzhen JPT Opto-Electronics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Shenzhen JPT Opto-Electronics

What's The Opportunity In Shenzhen JPT Opto-Electronics?

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. 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 Shenzhen JPT Opto-Electronics’s ratio of 33.02x is trading slightly below its industry peers’ ratio of 38.01x, which means if you buy Shenzhen JPT Opto-Electronics today, you’d be paying a decent price for it. And if you believe that Shenzhen JPT Opto-Electronics 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, Shenzhen JPT Opto-Electronics’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.

What kind of growth will Shenzhen JPT Opto-Electronics generate?

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. Shenzhen JPT Opto-Electronics' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 688025’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 financial strength of the company. Have these factors changed since the last time you looked at 688025? 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 688025, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for 688025, 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. Every company has risks, and we've spotted 1 warning sign for Shenzhen JPT Opto-Electronics you should know about.

If you are no longer interested in Shenzhen JPT Opto-Electronics, 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.

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