When Should You Buy Hino Motors, Ltd. (TSE:7205)?

Hino Motors, Ltd. (TSE:7205), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSE. 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 stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Hino Motors’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Hino Motors

What's The Opportunity In Hino Motors?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.7% below our intrinsic value, which means if you buy Hino Motors today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ¥501.74, then there’s not much of an upside to gain from mispricing. What's more, Hino Motors’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Hino Motors 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. 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. Hino Motors' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 7205’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on 7205, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

So while earnings quality is important, it's equally important to consider the risks facing Hino Motors at this point in time. Case in point: We've spotted 1 warning sign for Hino Motors you should be aware of.

If you are no longer interested in Hino Motors, 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.