At NT$149, Is It Time To Put Unimicron Technology Corp. (TWSE:3037) On Your Watch List?

Unimicron Technology Corp. (TWSE:3037), 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$216 and falling to the lows of NT$138. 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 Unimicron Technology's current trading price of NT$149 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 Unimicron Technology’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 Unimicron Technology

What's The Opportunity In Unimicron Technology?

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 Unimicron Technology’s ratio of 23.84x is trading slightly above its industry peers’ ratio of 22.95x, which means if you buy Unimicron Technology today, you’d be paying a relatively sensible price for it. And if you believe that Unimicron Technology 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 Unimicron Technology’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 Unimicron Technology?

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. Unimicron Technology's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 3037’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 track record of its management team. Have these factors changed since the last time you looked at 3037? 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 3037, 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 3037, 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 Unimicron Technology as a business, it's important to be aware of any risks it's facing. Be aware that Unimicron Technology is showing 4 warning signs in our investment analysis and 1 of those is a bit unpleasant...

If you are no longer interested in Unimicron Technology, 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.