Is It Too Late To Consider Buying MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM)?

MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQCM over the last few months. 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 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? Today we will analyse the most recent data on MEDIROM Healthcare Technologies’s outlook and valuation to see if the opportunity still exists.

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Is MEDIROM Healthcare Technologies Still Cheap?

Great news for investors – MEDIROM Healthcare Technologies is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that MEDIROM Healthcare Technologies’s ratio of 9.86x is below its peer average of 18.08x, which indicates the stock is trading at a lower price compared to the Consumer Services industry. What’s more interesting is that, MEDIROM Healthcare Technologies’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

View our latest analysis for MEDIROM Healthcare Technologies

What does the future of MEDIROM Healthcare Technologies look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for MEDIROM Healthcare Technologies. 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? Since MRM is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on MRM for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MRM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

If you'd like to know more about MEDIROM Healthcare Technologies as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 5 warning signs for MEDIROM Healthcare Technologies and you'll want to know about them.

If you are no longer interested in MEDIROM Healthcare Technologies, 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.