Wetouch Technology (WETH) AI Stock Analysis

• Market Cap: $26.97M
• Dividend Yield: N/A
• Average Volume (3M): 243.53K
• Price to Earnings (P/E): 3.6
• Beta (1Y): 1.00
• Revenue Growth: 6.08%
• EPS Growth: 123.07%
• Country: US
• Employees: 131
• Sector: Technology
• Sector Strength: 88
• Industry: Real Estate - Services
• EPS (TTM): 0.28
• Shares Outstanding: 11,931,534
• 10 Day Avg. Volume: 495,527
• 30 Day Avg. Volume: 243,528
• PEG Ratio: -0.08
• Price to Book (P/B): 0.17
• Price to Sales (P/S): 0.49
• P/FCF Ratio: 22.08
• Enterprise Value/Market Cap: -2.38
• Enterprise Value/Revenue: -1.48
• Enterprise Value/Gross Profit: -4.37
• Enterprise Value/Ebitda: -6.08
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $2.50 ▲(37.36% Upside)

Wetouch Technology's strong valuation due to a low P/E ratio is a significant positive factor, suggesting potential undervaluation. The stable financial performance with strong cash flow generation supports the stock's attractiveness, despite challenges in profitability margins. Technical indicators show a positive trend, although some caution is advised due to potential oversold conditions.

Positive Factors

Business Model Strength

The company's focus on customized touchscreen solutions for diverse industries ensures a steady demand, underpinning its business model's resilience.

Operational Efficiency

Efficient cost management, reflected in a strong gross margin, supports sustainable profitability and competitive pricing strategies.

Debt-Free Balance Sheet

A debt-free balance sheet enhances financial flexibility, allowing the company to invest in growth opportunities without the burden of interest obligations.

Negative Factors

High Leverage

High leverage with limited equity buffer increases financial risk, potentially impacting the company's ability to withstand economic downturns.

Cash Flow Challenges

Weak free cash flow generation limits the company's ability to reinvest in growth and meet financial obligations, posing a risk to liquidity.

Declining Profitability

A declining net profit margin indicates challenges in maintaining profitability, potentially affecting long-term financial health and investor confidence.

Wetouch Technology Business Overview & Revenue Model

Company Description

Wetouch Technology Inc. engages in the research, development, manufacture, sale, and servicing of medium to large sized projected capacitive touchscreens in the Peoples Republic of China, Taiwan, South Korea, and internationally. Its product portfolio comprises medium to large sized projected capacitive touchscreens, which range from 7.0 inch to 42-inch screens. The company offers Glass-Glass, which are primarily used in GPS/car entertainment panels in mid-size and luxury cars, industrial human-machine interface (HMI), financial and banking terminals, point of sale, and lottery machines; Glass-Film-Film, which are primarily used in high-end GPS and entertainment panels, industrial HMI, financial and banking terminals, lottery, and gaming industry; Plastic-Glass, which are used in GPS/entertainment panels motor vehicle GPS, smart home, robots, and charging stations; and Glass-Film that are used in industrial HMI. Its products are also used in financial terminals, automotive, POS, gaming, lottery, medical, HMI, and other specialized industries. The company was founded in 2011 and is based in Meishan, China.

How the Company Makes Money

Wetouch Technology generates revenue primarily through the sale of its proprietary touch and interactive technologies, including touchscreens and haptic systems, directly to manufacturers and OEMs in various industries. The company also earns income through licensing agreements for its patented technologies, allowing other companies to integrate Wetouch's innovations into their products. Additionally, Wetouch offers customization and consulting services, providing tailored solutions for clients looking to enhance their products with interactive features. Strategic partnerships with key industry players further amplify its revenue streams by enabling collaborative projects and joint ventures that expand market reach.

Wetouch Technology Financial Statement Overview

Summary

Wetouch Technology demonstrates a stable financial position with low leverage and strong cash flow generation. However, the company faces challenges in maintaining profitability margins and converting earnings into cash. Continued focus on operational efficiency and revenue growth will be crucial for future performance.

Income Statement

Wetouch Technology has shown a modest revenue growth rate of 3.06% in the most recent year, indicating a stable but slow growth trajectory. The gross profit margin has decreased from 43.29% to 32.18%, and the net profit margin has also declined from 20.81% to 14.26%, suggesting pressure on profitability. The EBIT and EBITDA margins have similarly decreased, reflecting challenges in maintaining operational efficiency.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.008, indicating minimal leverage and financial risk. The return on equity has decreased to 4.84%, reflecting reduced profitability. However, the equity ratio remains healthy, suggesting a stable financial position.

Cash Flow

Wetouch Technology has experienced a significant free cash flow growth rate of 58.38%, highlighting improved cash generation capabilities. However, the operating cash flow to net income ratio has decreased to 0.41, indicating potential challenges in converting earnings into cash. The free cash flow to net income ratio remains strong at 0.77, suggesting efficient cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	43.52M	42.28M	39.71M	37.92M	40.79M	31.35M
Gross Profit	14.70M	13.61M	17.19M	14.05M	18.43M	15.61M
EBITDA	10.57M	9.33M	12.66M	11.42M	13.01M	12.94M
Net Income	7.44M	6.03M	8.26M	8.73M	17.39M	8.93M
Balance Sheet
Total Assets	139.91M	128.02M	119.64M	73.11M	68.68M	47.06M
Cash, Cash Equivalents and Short-Term Investments	113.19M	103.76M	98.04M	51.25M	46.16M	23.96M
Total Debt	666.00K	1.05M	1.71M	1.66M	2.03M	0.00
Total Liabilities	4.74M	3.43M	6.72M	4.27M	4.37M	2.71M
Stockholders Equity	135.17M	124.59M	112.92M	68.83M	64.31M	44.35M
Cash Flow
Free Cash Flow	10.15M	932.25K	10.46M	8.59M	2.36M	12.96M
Operating Cash Flow	10.30M	1.20M	12.72M	8.59M	14.05M	12.96M
Investing Cash Flow	-152.63K	-271.83K	-2.26M	0.00	6.16M	0.00
Financing Cash Flow	-434.58K	7.45M	39.95M	-652.63K	1.86M	-4.70M

Wetouch Technology Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1.82
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WETH, the sentiment is Neutral. The current price of 1.82 is below the 20-day moving average (MA) of 2.23, below the 50-day MA of 2.00, and above the 200-day MA of 1.32, indicating a neutral trend. The MACD of -0.07 indicates Positive momentum. The RSI at 41.37 is Neutral, neither overbought nor oversold. The STOCH value of 8.45 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WETH.

Wetouch Technology Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WETH	71 Outperform	$26.97M	3.57	5.96%	―	6.08%	123.07%
LGPS	66 Neutral	$25.78M	5.21	28.11%	2.07%	39.21%	124.84%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
FTHM	45 Neutral	$39.19M	―	-43.75%	―	32.78%	36.50%
OMH	45 Neutral	$19.92M	―	―	―	―	―
DUO	43 Neutral	$8.13M	-2.29	-8.20%	―	48.49%	-9554.26%
GBR	40 Neutral	$4.49M	-73.45	-1.70%	―	4.08%	-102.70%