Should You Think About Buying Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) Now?

Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX), 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 NASDAQGS. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Allscripts Healthcare Solutions’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Allscripts Healthcare Solutions

What Is Allscripts Healthcare Solutions Worth?

Great news for investors – Allscripts Healthcare Solutions is still trading at a fairly cheap price 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 Allscripts Healthcare Solutions’s ratio of 14.41x is below its peer average of 32.04x, which indicates the stock is trading at a lower price compared to the Healthcare Services industry. Another thing to keep in mind is that Allscripts Healthcare Solutions’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Allscripts Healthcare Solutions?

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. 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. However, with a negative profit growth of -18% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Allscripts Healthcare Solutions. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although MDRX is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to MDRX, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on MDRX for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Allscripts Healthcare Solutions as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Allscripts Healthcare Solutions and you'll want to know about these.

If you are no longer interested in Allscripts Healthcare Solutions, 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.