CHF Solutions Inc (NASDAQ:CHFS), a medical equipment company based in United States, saw a decent share price growth in the teens level on the NasdaqCM over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on CHF Solutions’s outlook and valuation to see if the opportunity still exists. See our latest analysis for CHF Solutions
What is CHF Solutions worth?Great news for investors – CHF Solutions is still trading at a fairly cheap price. In this instance, I’ve used price-to-book ratio (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that CHF Solutions’s ratio of 0.32x is below its peer average of 3.82x, which suggests the stock is undervalued compared to the Medical Equipment industry. However, given that CHF Solutions’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.
What kind of growth will CHF Solutions generate?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. With profit expected to grow by 88.74% over the next couple of years, the future seems bright for CHF Solutions. It looks like higher cash flows 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 CHFS is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on CHFS for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CHFS. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CHF Solutions. You can find everything you need to know about CHF Solutions in the latest infographic research report. If you are no longer interested in CHF Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.