In This Article:
Cogentix Medical Inc (NASDAQ:CGNT), a medical equipment company based in United States, received a lot of attention from a substantial price increase on the NasdaqCM over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Cogentix Medical’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Cogentix Medical
What’s the opportunity in Cogentix Medical?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that Cogentix Medical’s ratio of 3.69x is trading slightly below its industry peers’ ratio of 3.78x, which means if you buy Cogentix Medical today, you’d be paying a relatively fair price for it. And if you believe Cogentix Medical should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Cogentix Medical’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Cogentix Medical generate?
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. In Cogentix Medical’s case, its revenues over the next few years are expected to grow by 37.54%, 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? It seems like the market has already priced in CGNT’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 CGNT? Will you have enough conviction to buy should the price fluctuates below the true value?