Stock Analysis

Is Now The Time To Look At Buying Sunny Optical Technology (Group) Company Limited (HKG:2382)?

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SEHK:2382
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Sunny Optical Technology (Group) Company Limited (HKG:2382), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Sunny Optical Technology (Group)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Sunny Optical Technology (Group)

Is Sunny Optical Technology (Group) Still Cheap?

Sunny Optical Technology (Group) 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 Sunny Optical Technology (Group)’s ratio of 33.77x is above its peer average of 6.78x, which suggests the stock is trading at a higher price compared to the Electronic industry. But, is there another opportunity to buy low in the future? Since Sunny Optical Technology (Group)’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Sunny Optical Technology (Group) generate?

earnings-and-revenue-growth
SEHK:2382 Earnings and Revenue Growth February 22nd 2024

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. With profit expected to more than double over the next couple of years, the future seems bright for Sunny Optical Technology (Group). 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? It seems like the market has well and truly priced in 2382’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 2382 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 2382 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 2382, 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 Sunny Optical Technology (Group) as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Sunny Optical Technology (Group) you should be aware of.

If you are no longer interested in Sunny Optical Technology (Group), you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Sunny Optical Technology (Group) is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.

About SEHK:2382

Sunny Optical Technology (Group)

Sunny Optical Technology (Group) Company Limited, an investment holding company, engages in designing, researching, developing, manufacturing, and selling optical and optical related products, and scientific instruments.

Flawless balance sheet with reasonable growth potential.