At JP¥2,527, Is V Technology Co., Ltd. (TSE:7717) Worth Looking At Closely?

V Technology Co., Ltd. (TSE:7717), 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. While good news for shareholders, the company has traded much higher in the past year. 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? Today we will analyse the most recent data on V Technology’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for V Technology

Is V Technology Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17.03% above our intrinsic value, which means if you buy V Technology today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ¥2159.27, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that V Technology’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of V Technology look like?

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. V Technology's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 7717’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 an eye on 7717, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

If you want to dive deeper into V Technology, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for V Technology (1 doesn't sit too well with us!) that we believe deserve your full attention.

If you are no longer interested in V Technology, 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.