Stock Analysis

Is There Now An Opportunity In Advanced Power Electronics Co., Ltd. (TWSE:8261)?

TWSE:8261
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Advanced Power Electronics Co., Ltd. (TWSE:8261), might not be a large cap stock, but it saw a decent share price growth of 18% on the TWSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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 we will analyse the most recent data on Advanced Power Electronics’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Advanced Power Electronics

What's The Opportunity In Advanced Power Electronics?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio 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 Advanced Power Electronics’s ratio of 24.15x is trading slightly below its industry peers’ ratio of 28.44x, which means if you buy Advanced Power Electronics today, you’d be paying a decent price for it. And if you believe that Advanced Power Electronics should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Advanced Power Electronics’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 Advanced Power Electronics look like?

earnings-and-revenue-growth
TWSE:8261 Earnings and Revenue Growth February 6th 2025

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 grow by 38% over the next year, the near-term future seems bright for Advanced Power Electronics. 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? It seems like the market has already priced in 8261’s positive outlook, 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 8261? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on 8261, 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 8261, 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'd like to know more about Advanced Power Electronics as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Advanced Power Electronics you should know about.

If you are no longer interested in Advanced Power Electronics, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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

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.

About TWSE:8261

Advanced Power Electronics

Provides power discrete products in Taiwan.

Flawless balance sheet with solid track record and pays a dividend.

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