When Should You Buy Brooks Automation, Inc. (NASDAQ:BRKS)?

October 01, 2021
  •  Updated
April 14, 2022
NasdaqGS:AZTA
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Brooks Automation, Inc. (NASDAQ:BRKS), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. 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, what if the stock is still a bargain? Today I will analyse the most recent data on Brooks Automation’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Brooks Automation

Is Brooks Automation still cheap?

Brooks Automation 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 63.54x is currently well-above the industry average of 29.77x, 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 Brooks Automation’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 Brooks Automation generate?

earnings-and-revenue-growth
NasdaqGS:BRKS Earnings and Revenue Growth October 2nd 2021

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. With profit expected to grow by 79% over the next couple of years, the future seems bright for Brooks Automation. 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? BRKS’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 BRKS 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 BRKS 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 BRKS, which means it’s worth diving deeper into other factors 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. While conducting our analysis, we found that Brooks Automation has 1 warning sign and it would be unwise to ignore it.

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

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