Semler Scientific, Inc. (NASDAQ:SMLR), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQCM, rising to highs of US$97.57 and falling to the lows of US$52.64. 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 Semler Scientific's current trading price of US$52.64 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Semler Scientific’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Semler Scientific worth?
Great news for investors – Semler Scientific 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 Semler Scientific’s ratio of 16.85x is below its peer average of 46.11x, which indicates the stock is trading at a lower price compared to the Medical Equipment industry. Semler Scientific’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What kind of growth will Semler Scientific generate?
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. With profit expected to grow by 31% over the next couple of years, the future seems bright for Semler Scientific. 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 SMLR is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive 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 capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on SMLR for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SMLR. 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 investment decision.
If you'd like to know more about Semler Scientific as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Semler Scientific you should know about.
If you are no longer interested in Semler Scientific, 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 Semler Scientific?
Price-To-Earnings ratio (19.7x) is below the Medical Equipment industry average (34.8x)
Earnings are forecast to grow 14.73% per year
Profit margins (23.2%) are lower than last year (39.4%)
Volatile share price over the past 3 months
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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.