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While Silicom Ltd. (NASDAQ:SILC) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$18.00 at one point, and dropping to the lows of US$13.84. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Silicom's current trading price of US$15.00 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Silicom’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Silicom
Is Silicom Still Cheap?
According to our valuation model, Silicom seems to be fairly priced at around 7.1% below our intrinsic value, which means if you buy Silicom today, you’d be paying a fair price for it. And if you believe that the stock is really worth $16.15, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Silicom has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from Silicom?
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. Silicom's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to 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 SILC’s positive outlook, 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 SILC, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.