Is Now The Time To Look At Buying Sdiptech AB (publ) (STO:SDIP B)?

Sdiptech AB (publ) (STO:SDIP B), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the OM. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a 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 Sdiptech’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What's The Opportunity In Sdiptech?

According to our 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. We’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 19.89x is currently trading slightly below its industry peers’ ratio of 19.89x, which means if you buy Sdiptech today, you’d be paying a decent price for it. And if you believe that Sdiptech 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. So, is there another chance to buy low in the future? Given that Sdiptech’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

See our latest analysis for Sdiptech

What Kind Of Returns Can We Expect From Sdiptech In The Future?

What kind of returns can we expect from Sdiptech in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. A way to assess stock quality is by looking how much it returns to you as the investor compared to how much you’re invested. Sdiptech is expected to return 9.6% of your investment in the next couple of years if you buy the stock today. This is a pretty average return, which doesn’t significantly add much to the case for owning the stock.

What This Means For You

Are you a shareholder? SDIP B’s positive future returns 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 track record of the company’s management team. Has anything significant changed since the last time you examined SDIP B? And will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on SDIP B for a while, tentative on committing to the stock, we suggest you further examine the stock. Should the stock become an attractive buy again, you will be more informed to make a decision on SDIP B. Keep in mind the low future return, and whether the opportunity cost of investing in SDIP B versus another stock is worth it.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 2 warning signs for Sdiptech (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

If you are no longer interested in Sdiptech, 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.