Is Now An Opportune Moment To Examine Genius Electronic Optical Co., Ltd (TWSE:3406)?

Genius Electronic Optical Co., Ltd (TWSE:3406), is not the largest company out there, but it saw a significant share price rise of 34% in the past couple of months on the TWSE. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Genius Electronic Optical’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Genius Electronic Optical

What Is Genius Electronic Optical Worth?

Good news, investors! Genius Electronic Optical is still a bargain right now according to our price multiple model, which compares 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 Genius Electronic Optical’s ratio of 15.29x is below its peer average of 24.33x, which indicates the stock is trading at a lower price compared to the Electronic industry. What’s more interesting is that, Genius Electronic Optical’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 kind of growth will Genius Electronic Optical 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. Though in the case of Genius Electronic Optical, it is expected to deliver a negative earnings growth of -3.8%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Although 3406 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to 3406, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on 3406 for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Be aware that Genius Electronic Optical is showing 2 warning signs in our investment analysis and 1 of those is concerning...

If you are no longer interested in Genius Electronic Optical, 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.