In This Article:
While FitLife Brands, Inc. (NASDAQ:FTLF) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NASDAQCM over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine FitLife Brands’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for FitLife Brands
What's The Opportunity In FitLife Brands?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’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 19.28x is currently trading slightly below its industry peers’ ratio of 20.73x, which means if you buy FitLife Brands today, you’d be paying a decent price for it. And if you believe that FitLife Brands 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. Furthermore, it seems like FitLife Brands’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from FitLife Brands?
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. In FitLife Brands' case, its revenues over the next few years are expected to grow by 41%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? FTLF’s optimistic future growth appears to have been factored into the current share price, 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 FTLF? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?