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- NasdaqGS:OPCH
Is It Too Late To Consider Buying Option Care Health, Inc. (NASDAQ:OPCH)?
Option Care Health, Inc. (NASDAQ:OPCH), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$35.45 and falling to the lows of US$27.78. 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 Option Care Health's current trading price of US$27.78 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 Option Care Health’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Option Care Health
Is Option Care Health Still Cheap?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Option Care Health’s ratio of 20.82x is trading in-line with its industry peers’ ratio, which means if you buy Option Care Health today, you’d be paying a relatively sensible price for it. Although, there may be an opportunity to buy in the future. This is because Option Care Health’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can We Expect Decent Returns From Option Care Health?
Valuation is only one aspect of forming your investment views on Option Care Health. Another thing to consider is whether it is actually a high-quality company. The best type of investment is always in a great company, producing robust returns at a cheap price. We can determine the quality of a stock many ways; one way is to look at how much return it generates relative to the money we’ve invested in the stock. Option Care Health is expected to return 15% of your investment in the next couple of years if you buy the stock today. This is a relatively good return on your investment which builds up the case for owning the stock.
What This Means For You
Are you a shareholder? OPCH’s optimistic future return appears to have been factored into the current share price, 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 the company’s management team. Has anything significant changed since the last time you examined OPCH? And 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 an eye on OPCH for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for OPCH, which means it’s worth further examining other factors such as the track record of its management team, in order to take advantage of the next price drop.
If you'd like to know more about Option Care Health as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Option Care Health, and understanding these should be part of your investment process.
If you are no longer interested in Option Care Health, 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.
About NasdaqGS:OPCH
Option Care Health
Offers home and alternate site infusion services in the United States.
Very undervalued with excellent balance sheet.