What Is Entegris, Inc.'s (NASDAQ:ENTG) Share Price Doing?

By
Simply Wall St
Published
November 27, 2021
NasdaqGS:ENTG
Source: Shutterstock

Let's talk about the popular Entegris, Inc. (NASDAQ:ENTG). The company's shares received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. As a large-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? Let’s examine Entegris’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Entegris

What is Entegris worth?

Entegris 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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Entegris’s ratio of 53.49x is above its peer average of 29.32x, which suggests the stock is trading at a higher price compared to the Semiconductor industry. But, is there another opportunity to buy low in the future? Given that Entegris’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Entegris look like?

earnings-and-revenue-growth
NasdaqGS:ENTG Earnings and Revenue Growth November 28th 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. 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. Entegris' earnings over the next few years are expected to increase by 42%, 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? ENTG’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 ENTG 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 ENTG 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 optimistic prospect is encouraging for ENTG, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Entegris at this point in time. Every company has risks, and we've spotted 1 warning sign for Entegris you should know about.

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

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