Is SUNIC SYSTEM Co., Ltd. (KOSDAQ:171090) Potentially Undervalued?

SUNIC SYSTEM Co., Ltd. (KOSDAQ:171090), is not the largest company out there, but it saw a decent share price growth of 20% on the KOSDAQ over the last few months. While good news for shareholders, the company has traded much higher in the past year. 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 we will analyse the most recent data on SUNIC SYSTEM’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for SUNIC SYSTEM

What's The Opportunity In SUNIC SYSTEM?

According to our valuation model, SUNIC SYSTEM seems to be fairly priced at around 12.08% above our intrinsic value, which means if you buy SUNIC SYSTEM today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ₩36312.09, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that SUNIC SYSTEM’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from SUNIC SYSTEM?

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. 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. In SUNIC SYSTEM's case, its revenues over the next couple of years are expected to double, indicating an incredibly 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? It seems like the market has already priced in A171090’s positive outlook, with shares trading around its fair value. 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 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 an eye on A171090, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining 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 SUNIC SYSTEM at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of SUNIC SYSTEM.

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

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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.