At US$145, Is It Time To Put CONMED Corporation (NYSE:CNMD) On Your Watch List?

By
Simply Wall St
Published
April 09, 2022
NYSE:CNMD
Source: Shutterstock

CONMED Corporation (NYSE:CNMD), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on CONMED’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for CONMED

Is CONMED still cheap?

CONMED is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. I’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 68.34x is currently well-above the industry average of 38.48x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since CONMED’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will CONMED generate?

earnings-and-revenue-growth
NYSE:CNMD Earnings and Revenue Growth April 9th 2022

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. 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 98% over the next couple of years, the future seems bright for CONMED. 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? CNMD’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe CNMD 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 an eye on CNMD for a while, 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 positive outlook is encouraging for CNMD, 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 CONMED as a business, it's important to be aware of any risks it's facing. For example, we've found that CONMED has 2 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

If you are no longer interested in CONMED, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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