Is There Now An Opportunity In LOTTE Fine Chemical Co., Ltd. (KRX:004000)?

While LOTTE Fine Chemical Co., Ltd. (KRX:004000) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the KOSE over the last few months, increasing to ₩60,700 at one point, and dropping to the lows of ₩52,700. 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 LOTTE Fine Chemical's current trading price of ₩53,400 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at LOTTE Fine Chemical’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for LOTTE Fine Chemical

Is LOTTE Fine Chemical still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.42% above my intrinsic value, which means if you buy LOTTE Fine Chemical today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ₩53175.60, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because LOTTE Fine Chemical’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.

Can we expect growth from LOTTE Fine Chemical?

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. Though in the case of LOTTE Fine Chemical, it is expected to deliver a relatively unexciting earnings growth of 4.8%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? A004000’s 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 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 A004000, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.

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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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