Great Wall Motor (SEHK:2333) shares have seen mixed movement over the past month, with investors weighing the company’s recent performance and broader sector dynamics. The stock has delivered a year-to-date gain; however, recent weeks have brought new questions.
See our latest analysis for Great Wall Motor.
While Great Wall Motor’s year-to-date share price return of 15% signals that momentum has built steadily, it comes after a recent pullback. The stock has lost over 4% in the past month and nearly 20% over the past quarter. Still, with a 22.7% total shareholder return over the last year, longer-term investors have fared well.
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With analysts predicting meaningful upside from current levels and the shares trading at a sizeable discount to price targets, the question remains: Is Great Wall Motor undervalued, or is the market already accounting for future growth?
Great Wall Motor is trading at a price-to-earnings (P/E) ratio of 10.7x, which currently makes its valuation look attractive compared to both peers and the wider industry. With the last close at HK$14.95, investors are paying less per unit of earnings than for most rivals.
The price-to-earnings ratio is a classic measure of how much investors are willing to pay for a company’s annual net earnings. In the auto sector, a lower P/E can suggest undervaluation, assuming earnings are stable and not distorted by unusual one-off gains or losses. With Great Wall Motor, it suggests that the market may be underappreciating the company’s underlying earnings power, especially if recent profit trends reverse in the future.
Compared to the industry, this P/E of 10.7x is not just lower than direct Asian auto peers (average 18.7x). It is also below the estimated fair value multiple of 13.6x for the business. These comparative gaps could signal that the share price has not kept pace with the company’s long-term growth potential and that there is room for a rerating as sentiment or results improve.
Explore the SWS fair ratio for Great Wall Motor
Result: Price-to-Earnings of 10.7x (UNDERVALUED)
However, softer revenue growth or unexpected profit volatility could quickly shift sentiment and challenge the idea that Great Wall Motor is undervalued.
Find out about the key risks to this Great Wall Motor narrative.
To look at valuation from a different perspective, the SWS DCF model estimates Great Wall Motor’s fair value at HK$22.56, which is about 33.7% above the current share price. This suggests there could be more upside than the earnings multiple implies. However, does the DCF account for all the real-world risks facing the business?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Great Wall Motor for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 933 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.
Readers who prefer a hands-on approach or want to form their own view can dive into the numbers and easily build a personal analysis in just a few minutes with Do it your way.
A great starting point for your Great Wall Motor research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 2333.HK.
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