What Does Daiseki Eco. Solution Co., Ltd.'s (TSE:1712) Share Price Indicate?

Daiseki Eco. Solution Co., Ltd. (TSE:1712), is not the largest company out there, but it saw a decent share price growth of 20% 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. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Daiseki Eco. Solution’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Daiseki Eco. Solution

What's The Opportunity In Daiseki Eco. Solution?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 11.99x is currently trading slightly above its industry peers’ ratio of 11.54x, which means if you buy Daiseki Eco. Solution today, you’d be paying a relatively sensible price for it. And if you believe that Daiseki Eco. Solution should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, Daiseki Eco. Solution’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Daiseki Eco. Solution?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 0.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Daiseki Eco. Solution, at least in the short term.

What This Means For You

Are you a shareholder? 1712’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 1712? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 1712, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Daiseki Eco. Solution from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Daiseki Eco. Solution, 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.