Why Amada Co., Ltd. (TSE:6113) Could Be Worth Watching

Amada Co., Ltd. (TSE:6113), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the TSE over the last few months, increasing to JP¥1,869 at one point, and dropping to the lows of JP¥1,657. 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 Amada's current trading price of JP¥1,709 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Amada’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 Amada

What's The Opportunity In Amada?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 13% below our intrinsic value, which means if you buy Amada today, you’d be paying a fair price for it. And if you believe the company’s true value is ¥1967.45, then there’s not much of an upside to gain from mispricing. In addition to this, Amada has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Amada?

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 5.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Amada, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 6113’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 6113, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Amada.

If you are no longer interested in Amada, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com