Why ACM Research, Inc. (NASDAQ:ACMR) Could Be Worth Watching

ACM Research, Inc. (NASDAQ:ACMR), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine ACM Research’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for ACM Research

What Is ACM Research Worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio 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 16.95x is currently trading slightly below its industry peers’ ratio of 17.9x, which means if you buy ACM Research today, you’d be paying a decent price for it. And if you believe that ACM Research should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like ACM Research’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of ACM Research 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. ACM Research's earnings over the next few years are expected to increase by 39%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in ACMR’s positive 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 ACMR? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on ACMR, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for ACMR, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, ACM Research has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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

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

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.