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MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$62.58 at one point, and dropping to the lows of US$44.08. 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 MACOM Technology Solutions Holdings' current trading price of US$46.62 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MACOM Technology Solutions Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for MACOM Technology Solutions Holdings
Is MACOM Technology Solutions Holdings still cheap?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio 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 16.25x is currently trading slightly below its industry peers’ ratio of 17.43x, which means if you buy MACOM Technology Solutions Holdings today, you’d be paying a reasonable price for it. And if you believe MACOM Technology Solutions Holdings should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since MACOM Technology Solutions Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 MACOM Technology Solutions Holdings 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. However, with a negative profit growth of -0.9% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for MACOM Technology Solutions Holdings. This certainty tips the risk-return scale towards higher risk.