Is There Now An Opportunity In Shenzhen H&T Intelligent Control Co.Ltd (SZSE:002402)?

Shenzhen H&T Intelligent Control Co.Ltd (SZSE:002402), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥11.40 at one point, and dropping to the lows of CN¥8.91. 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 H&T Intelligent ControlLtd's current trading price of CN¥9.09 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 H&T Intelligent ControlLtd’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Shenzhen H&T Intelligent ControlLtd

Is Shenzhen H&T Intelligent ControlLtd Still Cheap?

Great news for investors – Shenzhen H&T Intelligent ControlLtd 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 25.22x is currently well-below the industry average of 34.97x, meaning that it is trading at a cheaper price relative to its peers. Shenzhen H&T Intelligent ControlLtd’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will Shenzhen H&T Intelligent ControlLtd generate?

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 more than double over the next couple of years, the future seems bright for Shenzhen H&T Intelligent ControlLtd. 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 002402 is currently trading below the industry PE ratio, it may be a great time to increase 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 financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 002402 for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 002402. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Shenzhen H&T Intelligent ControlLtd at this point in time. While conducting our analysis, we found that Shenzhen H&T Intelligent ControlLtd has 2 warning signs and it would be unwise to ignore these.

If you are no longer interested in Shenzhen H&T Intelligent ControlLtd, 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.