Is There Now An Opportunity In Surgical Science Sweden AB (publ) (STO:SUS)?

Surgical Science Sweden AB (publ) (STO:SUS), is not the largest company out there, but it received a lot of attention from a substantial price increase on the OM over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Surgical Science Sweden’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Surgical Science Sweden

What's The Opportunity In Surgical Science Sweden?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio 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 Surgical Science Sweden’s ratio of 33.1x is trading in-line with its industry peers’ ratio, which means if you buy Surgical Science Sweden today, you’d be paying a relatively reasonable price for it. In addition to this, it seems like Surgical Science Sweden’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Surgical Science Sweden?

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. 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. With profit expected to grow by 82% over the next couple of years, the future seems bright for Surgical Science Sweden. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SUS’s positive outlook, 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 its management team. Have these factors changed since the last time you looked at SUS? 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 tabs on SUS, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for SUS, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Surgical Science Sweden at this point in time. Every company has risks, and we've spotted 1 warning sign for Surgical Science Sweden you should know about.

If you are no longer interested in Surgical Science Sweden, 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.