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Should You Think About Buying JNBY Design Limited (HKG:3306) Now?

Simply Wall St

JNBY Design Limited (HKG:3306), which is in the luxury business, and is based in China, saw significant share price movement during recent months on the SEHK, rising to highs of HK$12.00 and falling to the lows of HK$10.36. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether JNBY Design's current trading price of HK$10.36 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at JNBY Design’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for JNBY Design

Is JNBY Design still cheap?

According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.83x is currently trading slightly above its industry peers’ ratio of 8.68x, which means if you buy JNBY Design today, you’d be paying a relatively fair price for it. And if you believe that JNBY Design should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since JNBY Design’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will JNBY Design generate?

SEHK:3306 Past and Future Earnings, December 7th 2019

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. JNBY Design’s earnings over the next few years are expected to increase by 39%, 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? It seems like the market has already priced in 3306’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at 3306? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on 3306, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for 3306, 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 JNBY Design. You can find everything you need to know about JNBY Design in the latest infographic research report. If you are no longer interested in JNBY Design, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.