Is It Time To Consider Buying Deutsch Motors Inc. (KOSDAQ:067990)?

Deutsch Motors Inc. (KOSDAQ:067990), is not the largest company out there, but it led the KOSDAQ gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Deutsch Motors’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Deutsch Motors

What's the opportunity in Deutsch Motors?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.41% above my intrinsic value, which means if you buy Deutsch Motors today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ₩6682.73, there’s only an insignificant downside when the price falls to its real value. In addition to this, Deutsch Motors has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Deutsch Motors generate?

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. Deutsch Motors' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? A067990’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 financial strength of the company. 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 tabs on A067990, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Deutsch Motors at this point in time. When we did our research, we found 2 warning signs for Deutsch Motors (1 is a bit unpleasant!) that we believe deserve your full attention.

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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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