When should you buy BYD Electronic (International) Company Limited (HKG: 285)?

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While BYD Electronic (International) Company Limited (HKG: 285) may not be the most well-known stock at the moment, it has seen significant stock price movement in recent months on the SEHK, reaching highs of HK $ 52.60 and falling to the low of HK $ 26.45. Certain movements in stock prices can give investors a better opportunity to get into the stock and potentially buy at a lower price. One question to be answered is whether BYD Electronic (International) ‘s current trading price of HK $ 26.45 reflects the true value of the mid cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at the outlook and value of BYD Electronic (International) based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest review for BYD Electronic (International)

Is BYD Electronic (International) still cheap?

The stock price looks reasonable at the moment based on my multiple price model, where I compare the company’s price-to-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 BYD Electronic’s (International) ratio of 10.7x is trading slightly below its industry peers ratio of 13.21x, which means if you buy BYD Electronic (International) today, you would pay a reasonable price for it. And if you think BYD Electronic (International) should trade at this level in the long run, then there isn’t much to gain over other competitors in the industry. So, is there another chance to buy low in the future? Since BYD Electronic (International) stock is quite volatile (i.e. its price movements are amplified relative to the rest of the market), this could mean that the price may go down, giving us the possibility to buy later. This is based on its high beta, which is a good indicator of stock price volatility.

What kind of growth will BYD Electronic (International) generate?

SEHK: 285 Profit and Revenue Growth October 6, 2021

Investors looking to grow their portfolio may want to consider the prospects of a company before buying its shares. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s take a look at the future expectations of the business as well. BYD Electronic (International) profits over the next few years are expected to increase by 30%, indicating a very optimistic future. This should lead to more robust cash flow, fueling a higher value of the stock.

What this means for you:

Are you a shareholder? It looks like the market has already taken in the positive outlook of 285, with stocks trading around industry price multiples. However, there are also other important factors that we did not consider today, such as the financial strength of the company. Have these factors changed since you last watched 285? Will you be confident enough to invest in the business if the price drops below the industry PE ratio?

Are you a potential investor? If you’ve been keeping your eye on 285, this might not be the most optimal time to buy, given that it trades around industry price multiples. However, the positive outlook is encouraging for 285, which means that it is worth taking a closer look at other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you are interested in learning more about BYD Electronic (International) as a business, it is important to be aware of the risks it faces. Our analysis shows 2 warning signs for BYD Electronic (International) (1 should not be ignored!) And we strongly recommend that you review them before investing.

If you are no longer interested in BYD Electronic (International), you can use our free platform to view our list of over 50 other stocks with high growth potential.

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 shares 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 documents. Simply Wall St has no position in any of the stocks mentioned.

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