At ₩42,150, Is It Time To Put Korea Gas Corporation (KRX:036460) On Your Watch List?

Korea Gas Corporation (KRX:036460), might not be a large cap stock, but it saw a significant share price rise of 60% in the past couple of months on the KOSE. While good news for shareholders, the company has traded much higher in the past year. 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, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Korea Gas’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Korea Gas

What Is Korea Gas Worth?

Good news, investors! Korea Gas is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is ₩55481.99, but it is currently trading at ₩42,150 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Korea Gas’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Korea Gas 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 expected decline of -3.2% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Korea Gas. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although A036460 is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to A036460, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on A036460 for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 2 warning signs with Korea Gas, and understanding these should be part of your investment process.

If you are no longer interested in Korea Gas, 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.

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