Dynagreen Environmental Protection Group Co., Ltd. (HKG:1330), which is in the commercial services business, and is based in China, saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Dynagreen Environmental Protection Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Dynagreen Environmental Protection Group 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 10.99x is currently trading slightly below its industry peers’ ratio of 11.9x, which means if you buy Dynagreen Environmental Protection Group today, you’d be paying a fair price for it. And if you believe that Dynagreen Environmental Protection Group should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, Dynagreen Environmental Protection Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Dynagreen Environmental Protection Group?
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. With profit expected to more than double over the next couple of years, the future seems bright for Dynagreen Environmental Protection Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? 1330’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 financial strength of the company. Have these factors changed since the last time you looked at 1330? 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 1330, 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 1330, 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 Dynagreen Environmental Protection Group. You can find everything you need to know about Dynagreen Environmental Protection Group in the latest infographic research report. If you are no longer interested in Dynagreen Environmental Protection Group, 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 firstname.lastname@example.org. 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.
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