Although BAIC Motor Corporation Limited (HKG: 1958) may not be the most well-known stock right now, it has dominated the SEHK winners with a relatively large price hike over the past two weeks. . With many analysts covering mid cap stocks, we can expect any price sensitive announcement to have factored into the share price already. But what if there is still an opportunity to buy? Let’s take a closer look at BAIC Motor’s valuation and outlook to determine if there is still an opportunity to trade.
Check out our latest review for BAIC Motor
What is the opportunity in BAIC Motor?
Good news, investors! BAIC Motor is still a good deal at the moment under my multiple pricing model, which compares the company’s price / earnings ratio to the industry average. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find BAIC Motor’s ratio of 7.54x to be lower than its peer average of 18.25x, indicating that the stock is trading below the auto industry. However, there may be another chance to buy again in the future. This is because BAIC Motor’s beta (a measure of stock price volatility) is high, which means its price movements will be inflated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall more than the rest of the market, providing a prime buying opportunity.
What does BAIC Motor’s future look like?
Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s also take a look at the future expectations of the business. With earnings expected to grow by 47% over the next two years, the future looks bright for BAIC Motor. It appears that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you:
Are you a shareholder? Given that 1958 is currently below the industry’s PE ratio, perhaps now is a great time to increase your holdings of stocks. With an optimistic outlook on the horizon, it appears that this growth has not yet been fully reflected in 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 tabs on 1958 for a while, now might be the time to take a leap. Its promising future earnings outlook is not yet fully reflected in the current share price, which means it is not too late to buy 1958. But before making any investment decisions, consider this. ‘other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
If you want to dive deeper into BAIC Motor, you will also take a look at the risks it currently faces. For example, BAIC Motor has 2 warning signs (and 1 which is of concern) we think you should be aware of.
If you are no longer interested in BAIC Motor, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.