Is There Now An Opportunity In STAAR Surgical Company (NASDAQ:STAA)?

STAAR Surgical Company (NASDAQ:STAA), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$43.32 and falling to the lows of US$28.46. 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 STAAR Surgical's current trading price of US$29.13 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 STAAR Surgical’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 STAAR Surgical

What's The Opportunity In STAAR Surgical?

STAAR Surgical is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to the industry average. We’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 73.12x is currently well-above the industry average of 35.21x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that STAAR Surgical’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 the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of STAAR Surgical look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 more than double over the next couple of years, the future seems bright for STAAR Surgical. 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? It seems like the market has well and truly priced in STAA’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe STAA 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. 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 tabs on STAA for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for STAA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about STAAR Surgical as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 2 warning signs (1 shouldn't be ignored!) that you ought to be aware of before buying any shares in STAAR Surgical.

If you are no longer interested in STAAR Surgical, 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.