Is Now An Opportune Moment To Examine So-Young International Inc. (NASDAQ:SY)?

While So-Young International Inc. (NASDAQ:SY) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$1.38 and falling to the lows of US$0.86. 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 So-Young International's current trading price of US$0.86 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at So-Young International’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 So-Young International

What's The Opportunity In So-Young International?

So-Young International is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison 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 So-Young International’s ratio of 52.59x is above its peer average of 22.88x, which suggests the stock is trading at a higher price compared to the Interactive Media and Services industry. In addition to this, it seems like So-Young International’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will So-Young International generate?

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. So-Young International'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 well and truly priced in SY’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe SY should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on SY for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for SY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into So-Young International, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for So-Young International and you'll want to know about them.

If you are no longer interested in So-Young International, 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.

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