Is Korea Circuit Co., Ltd. (KRX:007810) Potentially Undervalued?

Korea Circuit Co., Ltd. (KRX:007810), is not the largest company out there, but it saw significant share price movement during recent months on the KOSE, rising to highs of ₩17,900 and falling to the lows of ₩12,100. 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 Korea Circuit's current trading price of ₩12,850 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 Korea Circuit’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 Korea Circuit

Is Korea Circuit still cheap?

According to my valuation model, Korea Circuit seems to be fairly priced at around 15% below my intrinsic value, which means if you buy Korea Circuit today, you’d be paying a fair price for it. And if you believe the company’s true value is ₩15081.27, then there isn’t much 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 Korea Circuit’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.

What kind of growth will Korea Circuit generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Korea Circuit's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This 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 A007810’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on A007810, now may not be the most optimal 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.

If you'd like to know more about Korea Circuit as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Korea Circuit and we think they deserve your attention.

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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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