Why Rexon Industrial Corp.,Ltd (TPE:1515) Could Be Worth Watching

Rexon Industrial Corp.,Ltd (TPE:1515), might not be a large cap stock, but it saw significant share price movement during recent months on the TSEC, rising to highs of NT$82.30 and falling to the lows of NT$71.90. 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 Rexon IndustrialLtd's current trading price of NT$77.70 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 Rexon IndustrialLtd’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 Rexon IndustrialLtd

What's the opportunity in Rexon IndustrialLtd?

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. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 21.51x is currently trading slightly above its industry peers’ ratio of 17.54x, which means if you buy Rexon IndustrialLtd today, you’d be paying a relatively sensible price for it. And if you believe that Rexon IndustrialLtd should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Although, there may be an opportunity to buy in the future. This is because Rexon IndustrialLtd’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.

Can we expect growth from Rexon IndustrialLtd?

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. With profit expected to more than double over the next couple of years, the future seems bright for Rexon IndustrialLtd. 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? 1515’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 financial strength of the company. Have these factors changed since the last time you looked at 1515? 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 an eye on 1515, 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 1515, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Diving deeper into the forecasts for Rexon IndustrialLtd mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.

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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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