At ₩125,500, Is It Time To Put Lotte Shopping Co., Ltd. (KRX:023530) On Your Watch List?

Lotte Shopping Co., Ltd. (KRX:023530), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the KOSE over the last few months. With many analysts covering the mid-cap 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? Today I will analyse the most recent data on Lotte Shopping’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Lotte Shopping

What's the opportunity in Lotte Shopping?

Great news for investors – Lotte Shopping is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is ₩181997.48, but it is currently trading at ₩125,500 on the share market, meaning that there is still an opportunity to buy now. However, given that Lotte Shopping’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Lotte Shopping?

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 Shopping, it is expected to deliver a relatively unexciting top-line growth of 3.6% in the next few years, 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? Even though growth is relatively muted, since A023530 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on A023530 for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy A023530. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Lotte Shopping you should be aware of.

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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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