Why Lotte Chilsung Beverage Co.,Ltd. (KRX:005300) Could Be Worth Watching

Lotte Chilsung Beverage Co.,Ltd. (KRX:005300), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the KOSE. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Lotte Chilsung BeverageLtd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Lotte Chilsung BeverageLtd

Is Lotte Chilsung BeverageLtd still cheap?

According to my valuation model, Lotte Chilsung BeverageLtd seems to be fairly priced at around 8.21% above my intrinsic value, which means if you buy Lotte Chilsung BeverageLtd today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ₩121525.21, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Lotte Chilsung BeverageLtd’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Lotte Chilsung BeverageLtd 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. Lotte Chilsung BeverageLtd's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? A005300’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 A005300, 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.

If you'd like to know more about Lotte Chilsung BeverageLtd as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Lotte Chilsung BeverageLtd you should be mindful of and 1 of them is significant.

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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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