Is It Too Late To Consider Buying Harbin Electric Company Limited (HKG:1133)?

Simply Wall St · 10/18 03:33

Harbin Electric Company Limited (HKG:1133), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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? Today we will analyse the most recent data on Harbin Electric’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Harbin Electric

What Is Harbin Electric Worth?

Great news for investors – Harbin Electric is still trading at a fairly cheap price 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 Harbin Electric’s ratio of 5.02x is below its peer average of 8.6x, which indicates the stock is trading at a lower price compared to the Electrical industry. Another thing to keep in mind is that Harbin Electric’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 its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Harbin Electric look like?

earnings-and-revenue-growth
SEHK:1133 Earnings and Revenue Growth October 18th 2024

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. Harbin Electric's earnings over the next few years are expected to increase by 46%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since 1133 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 1133 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1133. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Harbin Electric you should be aware of.

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