At $4.27, Is It Time To Buy Endologix Inc (NASDAQ:ELGX)?
Endologix Inc (NASDAQ:ELGX), a medical equipment company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $6.25 at one point, and dropping to the lows of $4.24. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Endologix’s current trading price of $4.27 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 Endologix’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 Endologix
What is Endologix worth?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 4.17x is currently trading slightly above its industry peers’ ratio of 3.94x, which means if you buy Endologix today, you’d be paying a relatively fair price for it. And if you believe that Endologix should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Endologix’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 does the future of Endologix look like?
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. Endologix’s earnings over the next few years are expected to increase by 53.37%, indicating a highly optimistic future ahead. This should lead to more 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 Endologix’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 track record of its management team. Have these factors changed since the last time you looked at Endologix? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on Endologix, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for Endologix, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Endologix. You can find everything you need to know about Endologix in the latest infographic research report. If you are no longer interested in Endologix, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
