Stock Analysis

Is It Too Late To Consider Buying New Power Plasma Co.,Ltd (KOSDAQ:144960)?

KOSDAQ:A144960
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New Power Plasma Co.,Ltd (KOSDAQ:144960), might not be a large cap stock, but it led the KOSDAQ gainers with a relatively large price hike in the past couple of weeks. 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? Let’s examine New Power PlasmaLtd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for New Power PlasmaLtd

Is New Power PlasmaLtd still cheap?

According to my 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. 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 22.22x is currently trading slightly above its industry peers’ ratio of 21.11x, which means if you buy New Power PlasmaLtd today, you’d be paying a relatively reasonable price for it. And if you believe New Power PlasmaLtd 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. Is there another opportunity to buy low in the future? Since New Power PlasmaLtd’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of New Power PlasmaLtd look like?

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KOSDAQ:A144960 Earnings and Revenue Growth November 25th 2020

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 45%, 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 financial strength of the company. Have these factors changed since the last time you looked at A144960? 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 an eye on A144960, now may not be the most optimal 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.

So while earnings quality is important, it's equally important to consider the risks facing New Power PlasmaLtd at this point in time. While conducting our analysis, we found that New Power PlasmaLtd has 1 warning sign and it would be unwise to ignore it.

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Valuation is complex, but we're helping make it simple.

Find out whether New Power Plasma is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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