Is LIG Nex1 Co., Ltd. (KRX:079550) Potentially Undervalued?

While LIG Nex1 Co., Ltd. (KRX:079550) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the KOSE over the last few months. 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 LIG Nex1’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for LIG Nex1

Is LIG Nex1 still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.45% above my intrinsic value, which means if you buy LIG Nex1 today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ₩40204.71, there’s only an insignificant downside when the price falls to its real value. What's more, LIG Nex1’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of LIG Nex1 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. 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 68% over the next couple of years, the future seems bright for LIG Nex1. 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 A079550’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 A079550, now may not be the most advantageous 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that LIG Nex1 has 4 warning signs and it would be unwise to ignore these.

If you are no longer interested in LIG Nex1, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you decide to trade LIG Nex1, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.