At HK$0.96, Is It Time To Put FIH Mobile Limited (HKG:2038) On Your Watch List?

While FIH Mobile Limited (HKG:2038) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SEHK, rising to highs of HK$1.13 and falling to the lows of HK$0.96. 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 FIH Mobile's current trading price of HK$0.96 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 FIH Mobile’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for FIH Mobile

What's The Opportunity In FIH Mobile?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’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 15.99x is currently well-above the industry average of 6.41x, meaning that it is trading at a more expensive price relative to its peers. In addition to this, it seems like FIH Mobile’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will FIH Mobile 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. However, with a relatively muted profit growth of 9.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for FIH Mobile, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in 2038’s outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 2038 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 2038 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 positive growth outlook may mean 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 FIH Mobile as a business, it's important to be aware of any risks it's facing. For example - FIH Mobile has 1 warning sign we think you should be aware of.

If you are no longer interested in FIH Mobile, 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.