Apricus Biosciences Inc (NASDAQ:APRI), a pharmaceuticals company based in United States, saw significant share price volatility over the past couple of months on the NasdaqCM, rising to the highs of $2.05 and falling to the lows of $1.48. 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 APRI’s current trading price of $1.62 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 APRI’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 Apricus Biosciences
What is APRI worth?
According to my relative valuation model, APRI 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 3.9x is currently trading slightly below its industry peers’ ratio of 4.9x, which means if you buy APRI today, you’d be paying a relatively reasonable price for it. And if you believe APRI should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, APRI’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for APRI to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will APRI generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With revenue expected to more than double in the upcoming year, the future appears to be extremely bright for APRI. If expenses can also be maintained, it looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? APRI’s optimistic future growth appears to have been factored into the current share price, 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 APRI? 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 APRI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for APRI, which means it’s worth diving deeper into 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 Apricus Biosciences. You can find everything you need to know about APRI in the latest infographic research report. If you are no longer interested in Apricus Biosciences, 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.