Synaptics Incorporated (NASDAQ:SYNA), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Synaptics’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What’s the opportunity in Synaptics?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.89% above my intrinsic value, which means if you buy Synaptics today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $75.68, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Synaptics’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Synaptics generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -6.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Synaptics. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? SYNA seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on SYNA for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on SYNA should the price fluctuate below its true value.
If you want to dive deeper into Synaptics, you’d also look into what risks it is currently facing. You’d be interested to know, that we found 4 warning signs for Synaptics and you’ll want to know about them.
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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. 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.
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