Is There Now An Opportunity In Chenming Electronic Tech. Corp. (TWSE:3013)?

Simply Wall St · 10/14 22:27

Chenming Electronic Tech. Corp. (TWSE:3013), is not the largest company out there, but it led the TWSE gainers with a relatively large price hike in the past couple of weeks. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. 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? Let’s take a look at Chenming Electronic Tech’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Chenming Electronic Tech

What Is Chenming Electronic Tech Worth?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 Chenming Electronic Tech’s ratio of 68.23x is above its peer average of 20.98x, which suggests the stock is trading at a higher price compared to the Tech industry. Another thing to keep in mind is that Chenming Electronic Tech’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 the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of Chenming Electronic Tech look like?

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TWSE:3013 Earnings and Revenue Growth October 14th 2024

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double in the upcoming, the future appears to be extremely bright for Chenming Electronic Tech. 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 well and truly priced in 3013’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 3013 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 tabs on 3013 for some time, 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 3013, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Chenming Electronic Tech you should be mindful of and 1 of these is significant.

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