At CN¥7.37, Is It Time To Put Jiangsu Azure Corporation (SZSE:002245) On Your Watch List?

Jiangsu Azure Corporation (SZSE:002245), might not be a large cap stock, but it saw significant share price movement during recent months on the SZSE, rising to highs of CN¥8.53 and falling to the lows of CN¥7.01. 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 Jiangsu Azure's current trading price of CN¥7.37 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 Jiangsu Azure’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 Jiangsu Azure

Is Jiangsu Azure Still Cheap?

Jiangsu Azure appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and 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 Jiangsu Azure’s ratio of 31.86x is above its peer average of 16.81x, which suggests the stock is trading at a higher price compared to the Logistics industry. Another thing to keep in mind is that Jiangsu Azure’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 the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of Jiangsu Azure look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Jiangsu Azure's 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 well and truly priced in 002245’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 002245 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 002245 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 002245, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 1 warning sign with Jiangsu Azure, and understanding it should be part of your investment process.

If you are no longer interested in Jiangsu Azure, 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.