Is There Now An Opportunity In LifeVantage Corporation (NASDAQ:LFVN)?

LifeVantage Corporation (NASDAQ:LFVN), might not be a large cap stock, but it saw a decent share price growth of 11% on the NASDAQCM over the last few months. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on LifeVantage’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for LifeVantage

What Is LifeVantage Worth?

According to our 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, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that LifeVantage’s ratio of 21.55x is trading slightly above its industry peers’ ratio of 21.54x, which means if you buy LifeVantage today, you’d be paying a relatively sensible price for it. And if you believe that LifeVantage should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, LifeVantage’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from LifeVantage?

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 relatively muted revenue growth of 4.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for LifeVantage, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in LFVN’s growth outlook, 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 its management team. Have these factors changed since the last time you looked at LFVN? Will you have enough conviction to buy should the price fluctuate below the the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on LFVN, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 3 warning signs for LifeVantage (1 is concerning!) that we believe deserve your full attention.

If you are no longer interested in LifeVantage, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com