Is There Now An Opportunity In Eclat Textile Co., Ltd. (TWSE:1476)?

Eclat Textile Co., Ltd. (TWSE:1476), might not be a large cap stock, but it saw significant share price movement during recent months on the TWSE, rising to highs of NT$580 and falling to the lows of NT$498. 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 Eclat Textile's current trading price of NT$519 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Eclat Textile’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 Eclat Textile

What Is Eclat Textile Worth?

According to our valuation model, Eclat Textile seems to be fairly priced at around 17% below our intrinsic value, which means if you buy Eclat Textile today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth NT$623.65, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Eclat Textile’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Eclat Textile look like?

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. Eclat Textile's earnings over the next few years are expected to increase by 28%, 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? It seems like the market has already priced in 1476’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 1476, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

So while earnings quality is important, it's equally important to consider the risks facing Eclat Textile at this point in time. Case in point: We've spotted 1 warning sign for Eclat Textile you should be aware of.

If you are no longer interested in Eclat Textile, 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.