Is Now An Opportune Moment To Examine Zhejiang Dahua Technology Co., Ltd. (SZSE:002236)?

While Zhejiang Dahua Technology Co., Ltd. (SZSE:002236) might not have the largest market cap around , it led the SZSE gainers with a relatively large price hike in the past couple of weeks. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Zhejiang Dahua Technology’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Zhejiang Dahua Technology

Is Zhejiang Dahua Technology Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 4.8% below our intrinsic value, which means if you buy Zhejiang Dahua Technology today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth CN¥17.27, then there’s not much of an upside to gain from mispricing. In addition to this, Zhejiang Dahua Technology has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Zhejiang Dahua Technology?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Zhejiang Dahua Technology, at least in the near future.

What This Means For You

Are you a shareholder? 002236 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 002236 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on 002236 should the price fluctuate below its true value.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To help with this, we've discovered 2 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Zhejiang Dahua Technology.

If you are no longer interested in Zhejiang Dahua 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.