Should You Think About Buying Kawasaki Heavy Industries, Ltd. (TSE:7012) Now?

While Kawasaki Heavy Industries, Ltd. (TSE:7012) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the TSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Kawasaki Heavy Industries’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Kawasaki Heavy Industries

What's The Opportunity In Kawasaki Heavy Industries?

Great news for investors – Kawasaki Heavy Industries is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is ¥6745.89, but it is currently trading at JP¥5,011 on the share market, meaning that there is still an opportunity to buy now. However, given that Kawasaki Heavy Industries’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Kawasaki 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. 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 Kawasaki 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? Since 7012 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 7012 for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 7012. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Kawasaki Heavy Industries at this point in time. For instance, we've identified 4 warning signs for Kawasaki Heavy Industries (1 is significant) you should be familiar with.

If you are no longer interested in Kawasaki 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.