Is Now An Opportune Moment To Examine Sumitomo Bakelite Company Limited (TSE:4203)?

While Sumitomo Bakelite Company Limited (TSE:4203) might not have the largest market cap around , it saw significant share price movement during recent months on the TSE, rising to highs of JP¥4,635 and falling to the lows of JP¥4,180. 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 Bakelite's current trading price of JP¥4,497 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 Bakelite’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Sumitomo Bakelite

Is Sumitomo Bakelite Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.45% above our intrinsic value, which means if you buy Sumitomo Bakelite today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth ¥4476.86, there’s only an insignificant downside when the price falls to its real value. What's more, Sumitomo Bakelite’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Sumitomo Bakelite 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. 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 37% over the next couple of years, the future seems bright for Sumitomo Bakelite. 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? It seems like the market has already priced in 4203’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 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 4203, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Sumitomo Bakelite you should be aware of.

If you are no longer interested in Sumitomo Bakelite, 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.