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Is Now An Opportune Moment To Examine AAC Technologies Holdings Inc. (HKG:2018)?

Simply Wall St

AAC Technologies Holdings Inc. (HKG:2018), which is in the electronic business, and is based in China, led the SEHK gainers with a relatively large price hike in the past couple of weeks. 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. However, could the stock still be trading at a relatively cheap price? Let’s take a look at AAC Technologies Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for AAC Technologies Holdings

Is AAC Technologies Holdings still cheap?

According to my valuation model, AAC Technologies Holdings seems to be fairly priced at around 12% below my intrinsic value, which means if you buy AAC Technologies Holdings today, you’d be paying a fair price for it. And if you believe the company’s true value is HK$60.38, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, AAC Technologies Holdings’s low beta implies that the stock is less volatile than the wider market.

What does the future of AAC Technologies Holdings look like?

SEHK:2018 Past and Future Earnings, November 19th 2019

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. 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. AAC Technologies Holdings’s earnings over the next few years are expected to increase by 37%, 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? 2018’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 2018, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on AAC Technologies Holdings. You can find everything you need to know about AAC Technologies Holdings in the latest infographic research report. If you are no longer interested in AAC Technologies Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.