At ₩10,670, Is Sunjin Beauty Science Co.Ltd (KOSDAQ:086710) Worth Looking At Closely?

Sunjin Beauty Science Co.Ltd (KOSDAQ:086710), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the KOSDAQ. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a small cap stock, hardly covered by any analysts, 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 Sunjin Beauty ScienceLtd’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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Is Sunjin Beauty ScienceLtd Still Cheap?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 Sunjin Beauty ScienceLtd’s ratio of 14.05x is above its peer average of 9.73x, which suggests the stock is trading at a higher price compared to the Chemicals industry. Another thing to keep in mind is that Sunjin Beauty ScienceLtd’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

View our latest analysis for Sunjin Beauty ScienceLtd

Can we expect growth from Sunjin Beauty ScienceLtd?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With revenues expected to grow by a double-digit 11% in the upcoming year, the outlook is positive for Sunjin Beauty ScienceLtd. If the level of expenses is able to be maintained, 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? A086710’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe A086710 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on A086710 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for A086710, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Sunjin Beauty ScienceLtd as a business, it's important to be aware of any risks it's facing. When we did our research, we found 2 warning signs for Sunjin Beauty ScienceLtd (1 is potentially serious!) that we believe deserve your full attention.

If you are no longer interested in Sunjin Beauty ScienceLtd, 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.