At kr156, Is It Time To Put Nordic Semiconductor ASA (OB:NOD) On Your Watch List?
While Nordic Semiconductor ASA (OB:NOD) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the OB. 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 examine Nordic Semiconductor’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Nordic Semiconductor
What Is Nordic Semiconductor Worth?
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. 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 Nordic Semiconductor’s ratio of 23.07x is trading slightly below its industry peers’ ratio of 23.55x, which means if you buy Nordic Semiconductor today, you’d be paying a reasonable price for it. And if you believe that Nordic Semiconductor 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. Although, there may be an opportunity to buy in the future. This is because Nordic Semiconductor’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Nordic Semiconductor?
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. Nordic Semiconductor's earnings over the next few years are expected to increase by 46%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? NOD’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at NOD? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on NOD, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for NOD, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.
If you are no longer interested in Nordic Semiconductor, 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.
Nordic Semiconductor ASA, a fabless semiconductor company, designs, sells, and delivers integrated circuits (ICs) and related products and services for use in short- and long- range wireless applications in Europe, the Americas, and the Asia/Pacific.
Outstanding track record with flawless balance sheet.