At US$13.26, Is The Beauty Health Company (NASDAQ:SKIN) Worth Looking At Closely?

While The Beauty Health Company (NASDAQ:SKIN) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NASDAQCM over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Beauty Health’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Beauty Health

Is Beauty Health Still Cheap?

According to my valuation model, Beauty Health seems to be fairly priced at around 6.2% below my intrinsic value, which means if you buy Beauty Health today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $14.14, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Beauty 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.

What does the future of Beauty Health look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 76% over the next couple of years, the future seems bright for Beauty Health. 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? SKIN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on SKIN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Beauty Health has 2 warning signs we think you should be aware of.

If you are no longer interested in Beauty 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.