Stock Analysis

At ₩6,150, Is It Time To Put New Power Plasma Co.,Ltd (KOSDAQ:144960) On Your Watch List?

KOSDAQ:A144960
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While New Power Plasma Co.,Ltd (KOSDAQ:144960) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KOSDAQ, rising to highs of ₩7,220 and falling to the lows of ₩6,010. 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 New Power PlasmaLtd's current trading price of ₩6,150 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 New Power PlasmaLtd’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for New Power PlasmaLtd

Is New Power PlasmaLtd still cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’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 16.67x is currently trading slightly below its industry peers’ ratio of 20.58x, which means if you buy New Power PlasmaLtd today, you’d be paying a reasonable price for it. And if you believe that New Power PlasmaLtd should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Although, there may be an opportunity to buy in the future. This is because New Power PlasmaLtd’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.

What kind of growth will New Power PlasmaLtd generate?

earnings-and-revenue-growth
KOSDAQ:A144960 Earnings and Revenue Growth March 6th 2021

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. In New Power PlasmaLtd's case, its revenues over the next few years are expected to grow by 39%, 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? A144960’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 A144960? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on A144960, 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 A144960, 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. Be aware that New Power PlasmaLtd is showing 2 warning signs in our investment analysis and 1 of those is significant...

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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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