Is It Too Late To Consider Buying Regina Miracle International (Holdings) Limited (HKG:2199)?

While Regina Miracle International (Holdings) Limited (HKG:2199) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the SEHK. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Regina Miracle International (Holdings)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Regina Miracle International (Holdings)

Is Regina Miracle International (Holdings) still cheap?

Regina Miracle International (Holdings) is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Regina Miracle International (Holdings)’s ratio of 30.24x is above its peer average of 11.99x, which suggests the stock is trading at a higher price compared to the Luxury industry. Another thing to keep in mind is that Regina Miracle International (Holdings)’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 kind of growth will Regina Miracle International (Holdings) 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. 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. Regina Miracle International (Holdings)'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 2199’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 2199 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 an eye on 2199 for a while, 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 positive outlook is encouraging for 2199, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Regina Miracle International (Holdings) as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for Regina Miracle International (Holdings) (1 is concerning!) that we believe deserve your full attention.

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This article by Simply Wall St is general in nature. 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.
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