Modern Dental Group Limited (SEHK:3600), a medical equipment company based in Hong Kong, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$2.52 at one point, and dropping to the lows of HK$2.19. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Modern Dental Group’s current trading price of HK$2.24 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 Modern Dental Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Modern Dental Group

What’s the opportunity in Modern Dental Group?

Great news for investors – Modern Dental Group is still trading at a fairly cheap price. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Modern Dental Group’s ratio of 14.36x is below its peer average of 23.69x, which suggests the stock is undervalued compared to the Medical Equipment industry. What’s more interesting is that, Modern Dental Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 Modern Dental Group generate?

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. Modern Dental Group’s earnings over the next few years are expected to increase by 61.23%, 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? Since 3600 is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 3600 for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 3600. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

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

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.