When Should You Buy BE Semiconductor Industries N.V. (AMS:BESI)?
BE Semiconductor Industries N.V. (AMS:BESI), which is in the semiconductor business, and is based in Netherlands, saw significant share price movement during recent months on the ENXTAM, rising to highs of €41.54 and falling to the lows of €29.47. 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 BE Semiconductor Industries's current trading price of €29.47 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 BE Semiconductor Industries’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 BE Semiconductor Industries
What's the opportunity in BE Semiconductor Industries?
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 26.38x is currently trading slightly above its industry peers’ ratio of 22.95x, which means if you buy BE Semiconductor Industries today, you’d be paying a relatively reasonable price for it. And if you believe BE Semiconductor Industries should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because BE Semiconductor Industries’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will BE Semiconductor Industries 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. With profit expected to more than double over the next couple of years, the future seems bright for BE Semiconductor Industries. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? BESI’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 BESI? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping tabs on BESI, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for BESI, 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 BE Semiconductor Industries. You can find everything you need to know about BE Semiconductor Industries in the latest infographic research report. If you are no longer interested in BE Semiconductor Industries, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
