At JP¥1,740, Is It Time To Put Ishihara Sangyo Kaisha,Ltd. (TSE:4028) On Your Watch List?

While Ishihara Sangyo Kaisha,Ltd. (TSE:4028) might not have the largest market cap around , it saw a significant share price rise of 33% in the past couple of months on the TSE. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Ishihara Sangyo KaishaLtd’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Ishihara Sangyo KaishaLtd

Is Ishihara Sangyo KaishaLtd Still Cheap?

Great news for investors – Ishihara Sangyo KaishaLtd is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Ishihara Sangyo KaishaLtd’s ratio of 9.81x is below its peer average of 14.54x, which indicates the stock is trading at a lower price compared to the Chemicals industry. Another thing to keep in mind is that Ishihara Sangyo KaishaLtd’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Ishihara Sangyo KaishaLtd 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. With profit expected to grow by 40% over the next couple of years, the future seems bright for Ishihara Sangyo KaishaLtd. 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 4028 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit 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 price multiple.

Are you a potential investor? If you’ve been keeping an eye on 4028 for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 4028. 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 3 warning signs for Ishihara Sangyo KaishaLtd (1 is potentially serious!) that we believe deserve your full attention.

If you are no longer interested in Ishihara Sangyo KaishaLtd, 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.