At JP¥1,029, Is It Time To Put LAC Co., Ltd. (TYO:3857) On Your Watch List?

LAC Co., Ltd. (TYO:3857), is not the largest company out there, but it saw significant share price movement during recent months on the JASDAQ, rising to highs of JP¥1,372 and falling to the lows of JP¥997. 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 LAC's current trading price of JP¥1,029 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at LAC’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for LAC

What is LAC worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15% below my intrinsic value, which means if you buy LAC today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ¥1217.00, then there’s not much of an upside to gain from mispricing. What's more, LAC’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from LAC?

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. LAC's earnings over the next few years are expected to increase by 50%, indicating a highly optimistic future ahead. This should lead to more 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 3857’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on 3857, 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 LAC at this point in time. For example - LAC has 2 warning signs we think you should be aware of.

If you are no longer interested in LAC, 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. 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.
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