What Does Astec LifeSciences Limited's (NSE:ASTEC) Share Price Indicate?

While Astec LifeSciences Limited (NSE:ASTEC) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NSEI over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Astec LifeSciences’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Astec LifeSciences

What is Astec LifeSciences worth?

Astec LifeSciences is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Astec LifeSciences’s ratio of 31.65x is above its peer average of 18.28x, which suggests the stock is trading at a higher price compared to the Chemicals industry. Furthermore, Astec LifeSciences’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of Astec LifeSciences look like?

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. Astec LifeSciences' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in ASTEC’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe ASTEC should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ASTEC for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for ASTEC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Astec LifeSciences as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Astec LifeSciences you should be aware of.

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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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