Stock Analysis

Why AtriCure, Inc. (NASDAQ:ATRC) Could Be Worth Watching

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NasdaqGM:ATRC
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AtriCure, Inc. (NASDAQ:ATRC), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGM over the last few months, increasing to US$87.14 at one point, and dropping to the lows of US$61.62. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether AtriCure's current trading price of US$63.63 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AtriCure’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for AtriCure

What's the opportunity in AtriCure?

AtriCure appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. I’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 64.41x is currently well-above the industry average of 46.06x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that AtriCure’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from AtriCure?

earnings-and-revenue-growth
NasdaqGM:ATRC Earnings and Revenue Growth January 20th 2022

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for AtriCure, at least in the near future.

What this means for you:

Are you a shareholder? If you believe ATRC 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. Given the uncertainty from negative growth in the future, this could be the right time to reduce your total portfolio risk. 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 ATRC for a while, now may not be the best time to enter into the stock. Its price has risen beyond its industry peers, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 4 warning signs (1 is concerning!) that you ought to be aware of before buying any shares in AtriCure.

If you are no longer interested in AtriCure, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for AtriCure?

AtriCure, Inc. develops, manufactures, and sells devices for the surgical ablation of cardiac tissue and systems, and intercostal nerves to medical centers in the United States, Europe, Asia, and internationally.

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Rewards

  • Trading at 7.6% below our estimate of its fair value

  • Revenue is forecast to grow 14.8% per year

Risks

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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