When Should You Buy Amorepacific Corporation (KRX:090430)?

While Amorepacific Corporation (KRX:090430) might not have the largest market cap around , it saw significant share price movement during recent months on the KOSE, rising to highs of ₩145,700 and falling to the lows of ₩121,300. 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 Amorepacific's current trading price of ₩128,800 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 Amorepacific’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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What's The Opportunity In Amorepacific?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Amorepacific’s ratio of 16.62x is trading slightly below its industry peers’ ratio of 19.29x, which means if you buy Amorepacific today, you’d be paying a reasonable price for it. And if you believe Amorepacific should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Amorepacific’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Check out our latest analysis for Amorepacific

Can we expect growth from Amorepacific?

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. However, with a negative profit growth of -11% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Amorepacific. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, A090430 appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on A090430, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on A090430 for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on A090430 should the price fluctuate below the industry PE ratio.

If you'd like to know more about Amorepacific as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Amorepacific you should know about.

If you are no longer interested in Amorepacific, 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.