Is It Too Late To Consider Buying Sensirion Holding AG (VTX:SENS)?

Sensirion Holding AG (VTX:SENS), is not the largest company out there, but it saw significant share price movement during recent months on the SWX, rising to highs of CHF98.00 and falling to the lows of CHF72.30. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Sensirion Holding's current trading price of CHF75.90 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 Sensirion Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Sensirion Holding

What's The Opportunity In Sensirion Holding?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.57x is currently trading slightly below its industry peers’ ratio of 20.41x, which means if you buy Sensirion Holding today, you’d be paying a reasonable price for it. And if you believe that Sensirion Holding should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Sensirion Holding’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Sensirion Holding?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -19% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Sensirion Holding. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, SENS appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 SENS, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on SENS for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This 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 gel your views on SENS should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Sensirion Holding, you'd also look into what risks it is currently facing. For example - Sensirion Holding has 3 warning signs we think you should be aware of.

If you are no longer interested in Sensirion Holding, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.