Is Now An Opportune Moment To Examine Wemade Co.,Ltd. (KOSDAQ:112040)?

Wemade Co.,Ltd. (KOSDAQ:112040), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the KOSDAQ. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine WemadeLtd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for WemadeLtd

Is WemadeLtd still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.3% below my intrinsic value, which means if you buy WemadeLtd today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ₩41073.68, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because WemadeLtd’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 WemadeLtd?

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. In WemadeLtd's case, its revenues over the next few years are expected to grow by 93%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in A112040’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 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 A112040, now may not be the most advantageous 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 2 warning signs for WemadeLtd and we think they deserve your attention.

If you are no longer interested in WemadeLtd, 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 WemadeLtd, 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.