Is It Too Late To Consider Buying Zhen Ding Technology Holding Limited (TPE:4958)?

Zhen Ding Technology Holding Limited (TPE:4958), 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$128 and falling to the lows of NT$113. 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 Zhen Ding Technology Holding's current trading price of NT$118 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 Zhen Ding Technology Holding’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 Zhen Ding Technology Holding

What is Zhen Ding Technology Holding worth?

Good news, investors! Zhen Ding Technology Holding is still a bargain right now according to my price multiple model, which compares 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 13.26x is currently well-below the industry average of 19.84x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Zhen Ding Technology Holding’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Zhen Ding Technology Holding generate?

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 grow by 59% over the next couple of years, the future seems bright for Zhen Ding Technology Holding. 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? Since 4958 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 4958 for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 4958. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that Zhen Ding Technology Holding has 2 warning signs and it would be unwise to ignore these.

If you are no longer interested in Zhen Ding Technology Holding, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you’re looking to trade Zhen Ding Technology Holding, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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 (at) simplywallst.com.