At ₩10,940, Is Daemyoung Energy Co.,Ltd (KOSDAQ:389260) Worth Looking At Closely?

Daemyoung Energy Co.,Ltd (KOSDAQ:389260), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the KOSDAQ over the last few months, increasing to ₩16,750 at one point, and dropping to the lows of ₩10,560. 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 Daemyoung EnergyLtd's current trading price of ₩10,940 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 Daemyoung EnergyLtd’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 Daemyoung EnergyLtd

What's The Opportunity In Daemyoung EnergyLtd?

Daemyoung EnergyLtd appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Daemyoung EnergyLtd’s ratio of 38.64x is above its peer average of 14.64x, which suggests the stock is trading at a higher price compared to the Renewable Energy industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Daemyoung EnergyLtd’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Daemyoung EnergyLtd look like?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Daemyoung EnergyLtd, at least in the near future.

What This Means For You

Are you a shareholder? If you believe A389260 is currently trading above its peers, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on A389260 for a while, now may not be the best time to enter into the stock. Its price has risen beyond its industry peers, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 4 warning signs for Daemyoung EnergyLtd (2 are potentially serious!) that we believe deserve your full attention.

If you are no longer interested in Daemyoung EnergyLtd, 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.