When Should You Buy Sumitomo Heavy Industries, Ltd. (TSE:6302)?

While Sumitomo Heavy Industries, Ltd. (TSE:6302) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the TSE over the last few months, increasing to JP¥4,747 at one point, and dropping to the lows of JP¥4,059. 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 Sumitomo Heavy Industries' current trading price of JP¥4,219 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 Sumitomo Heavy Industries’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 Sumitomo Heavy Industries

Is Sumitomo Heavy Industries Still Cheap?

According to our valuation model, Sumitomo Heavy Industries seems to be fairly priced at around 1.8% below our intrinsic value, which means if you buy Sumitomo Heavy Industries today, you’d be paying a fair price for it. And if you believe the company’s true value is ¥4297.78, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Sumitomo Heavy Industries has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Sumitomo Heavy Industries look like?

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. With profit expected to grow by 50% over the next couple of years, the future seems bright for Sumitomo Heavy Industries. 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? 6302’s optimistic future growth appears to have been factored into the current share price, 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 tabs on 6302, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Sumitomo Heavy Industries as a business, it's important to be aware of any risks it's facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Sumitomo Heavy Industries.

If you are no longer interested in Sumitomo Heavy Industries, 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