Should You Investigate Tokai Carbon Korea Co., Ltd. (KOSDAQ:064760) At ₩133,200?

Tokai Carbon Korea Co., Ltd. (KOSDAQ:064760), 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. The company is inching closer to its yearly highs following the recent share price climb. Less-covered, small caps tend to present 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 we will analyse the most recent data on Tokai Carbon Korea’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Tokai Carbon Korea

What's The Opportunity In Tokai Carbon Korea?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 25.97x is currently trading slightly above its industry peers’ ratio of 23.27x, which means if you buy Tokai Carbon Korea today, you’d be paying a relatively reasonable price for it. And if you believe Tokai Carbon Korea should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like Tokai Carbon Korea’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Tokai Carbon Korea look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Tokai Carbon Korea's earnings over the next few years are expected to increase by 56%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? A064760’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 A064760? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on A064760, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for A064760, 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.

If you'd like to know more about Tokai Carbon Korea as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Tokai Carbon Korea you should be aware of.

If you are no longer interested in Tokai Carbon Korea, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.