Should You Investigate WISE iTech Co., Ltd. (KOSDAQ:065370) At ₩17,050?

While WISE iTech Co., Ltd. (KOSDAQ:065370) 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 ₩22,400 and falling to the lows of ₩16,200. 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 WISE iTech's current trading price of ₩17,050 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 WISE iTech’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for WISE iTech

What's the opportunity in WISE iTech?

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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that WISE iTech’s ratio of 17.33x is trading slightly below its industry peers’ ratio of 21.93x, which means if you buy WISE iTech today, you’d be paying a decent price for it. And if you believe that WISE iTech 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. Is there another opportunity to buy low in the future? Since WISE iTech’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 kind of growth will WISE iTech generate?

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 WISE iTech's case, its revenues over the next few years are expected to grow by 62%, 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? A065370’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 A065370? 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 A065370, 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 A065370, 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. While conducting our analysis, we found that WISE iTech has 4 warning signs and it would be unwise to ignore them.

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

If you decide to trade WISE iTech, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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