When Should You Buy Allis Electric Co.,Ltd. (TWSE:1514)?

Allis Electric Co.,Ltd. (TWSE:1514), is not the largest company out there, but it saw significant share price movement during recent months on the TWSE, rising to highs of NT$133 and falling to the lows of NT$106. 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 Allis ElectricLtd's current trading price of NT$106 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 Allis ElectricLtd’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Allis ElectricLtd

What Is Allis ElectricLtd Worth?

Allis ElectricLtd is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to 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 Allis ElectricLtd’s ratio of 32.38x is above its peer average of 22.59x, which suggests the stock is trading at a higher price compared to the Electrical industry. Furthermore, Allis ElectricLtd’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Allis ElectricLtd?

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. Allis ElectricLtd's earnings over the next few years are expected to increase by 35%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 1514’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 1514 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. 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 tabs on 1514 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for 1514, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Allis ElectricLtd as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Allis ElectricLtd and we think they deserve your attention.

If you are no longer interested in Allis ElectricLtd, 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.