Is It Too Late To Consider Buying DB Hitek Co., Ltd. (KRX:000990)?

DB Hitek Co., Ltd. (KRX:000990), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the KOSE. As a ₩2.5t market-cap stock, it seems odd DB Hitek is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s take a look at DB Hitek’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for DB Hitek

What is DB Hitek worth?

According to my valuation model, DB Hitek seems to be fairly priced at around 8.5% below my intrinsic value, which means if you buy DB Hitek today, you’d be paying a reasonable price for it. And if you believe the company’s true value is ₩62402.33, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because DB Hitek’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.

Can we expect growth from DB Hitek?

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. With profit expected to grow by 41% over the next couple of years, the future seems bright for DB Hitek. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? A000990’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 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 tabs on A000990, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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 DB Hitek at this point in time. While conducting our analysis, we found that DB Hitek has 1 warning sign and it would be unwise to ignore this.

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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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