Is LG Display Co., Ltd. (KRX:034220) Potentially Undervalued?

LG Display Co., Ltd. (KRX:034220), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the KOSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine LG Display’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for LG Display

Is LG Display still cheap?

According to my valuation model, LG Display seems to be fairly priced at around 19% below my intrinsic value, which means if you buy LG Display today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ₩31600.26, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because LG Display’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.

What kind of growth will LG Display 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. However, with a relatively muted revenue growth of 8.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for LG Display, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in A034220’s future outlook, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on A034220, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 LG Display at this point in time. For example, we've found that LG Display has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

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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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