Is now the time to look at buying Surgical Science Sweden AB (publ) (STO:SUS)?
Surgical Science Sweden AB (publ) (STO:SUS), may not be a large-cap stock, but it saw decent share price growth in the mid-teens on OM over the past few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more opportunity for mispricing because there is less activity to drive the stock closer to fair value. Is it still possible to buy here? Let’s examine Surgical Science Sweden’s valuation and outlook in more detail to determine if there is still a bargain opportunity.
Check out our latest analysis for Surgical Science Sweden
Is Surgical Science Sweden still cheap?
Surgical Science Sweden appears expensive according to my price multiple model, which compares the company’s price-to-earnings ratio to the industry average. I have used the price/earnings ratio in this case because there is not enough visibility to predict its cash flows. The stock’s ratio of 62.62x is currently well above the industry average of 30.66x, meaning it trades at a premium to its peers. But, is there another opportunity to buy low in the future? Given that Surgical Science Sweden’s stock is quite volatile (ie its price movements are magnified relative to the rest of the market), this could mean that the price could drop lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator of share price volatility.
What does the future of Surgical Science Sweden look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its stock. Buying a good 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. Surgical Science Sweden’s results over the next few years are expected to double, indicating a very optimistic future. This should lead to stronger cash flows, leading to a higher share value.
What this means for you
Are you a shareholder? It seems the market has well and truly priced in SUS’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking another question – should I sell? If you think SUS should trade below its current price, it may be profitable to sell high and buy it back up when the price falls toward the industry’s PE ratio. 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 SUS for a while, now may not be the best time to enter the stock. The price has outperformed its industry peers, meaning there is likely no more upside from mispricing. However, the optimistic outlook is encouraging for SUS, meaning it is worth diving deeper into other factors to take advantage of the next price drop.
So, if you want to dive deeper into this stock, it is crucial to consider any risks it faces. In terms of investment risks, we have identified 1 warning sign with Surgical Science Sweden, and understanding that should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only by using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any shares and does not take into account your goals or your financial situation. We strive to provide you with long-term focused analysis driven by fundamental data. Note that our analysis may not take into account recent price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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