GLOBAL TEK FABRICATION CO., Ltd. (TPE:4566), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSEC. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on GLOBAL TEK FABRICATION’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for GLOBAL TEK FABRICATION
What is GLOBAL TEK FABRICATION worth?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 GLOBAL TEK FABRICATION’s ratio of 28.28x is trading slightly above its industry peers’ ratio of 26.88x, which means if you buy GLOBAL TEK FABRICATION today, you’d be paying a relatively sensible price for it. And if you believe GLOBAL TEK FABRICATION should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, GLOBAL TEK FABRICATION’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of GLOBAL TEK FABRICATION 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. 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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for GLOBAL TEK FABRICATION. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? 4566’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 4566? 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 tabs on 4566, 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 4566, 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 want to dive deeper into GLOBAL TEK FABRICATION, you'd also look into what risks it is currently facing. At Simply Wall St, we found 4 warning signs for GLOBAL TEK FABRICATION and we think they deserve your attention.
If you are no longer interested in GLOBAL TEK FABRICATION, 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 GLOBAL TEK FABRICATION, 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
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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.
About TWSE:4566
GLOBAL TEK FABRICATION
Manufactures and sells precision parts and subassemblies in China.
Adequate balance sheet low.
