What Is Coda Octopus Group, Inc.'s (NASDAQ:CODA) Share Price Doing?
Coda Octopus Group, Inc. (NASDAQ:CODA), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQCM, rising to highs of US$9.25 and falling to the lows of US$5.85. 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 Coda Octopus Group's current trading price of US$5.98 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 Coda Octopus Group’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 Coda Octopus Group
What Is Coda Octopus Group Worth?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Coda Octopus Group’s ratio of 16.02x is trading slightly above its industry peers’ ratio of 15.96x, which means if you buy Coda Octopus Group today, you’d be paying a relatively sensible price for it. And if you believe that Coda Octopus Group should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Although, there may be an opportunity to buy in the future. This is because Coda Octopus Group’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.
Can we expect growth from Coda Octopus Group?
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 profit expected to grow by 45% over the next couple of years, the future seems bright for Coda Octopus Group. 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? CODA’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 CODA? 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 CODA, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for CODA, 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.
So while earnings quality is important, it's equally important to consider the risks facing Coda Octopus Group at this point in time. You'd be interested to know, that we found 3 warning signs for Coda Octopus Group and you'll want to know about these.
If you are no longer interested in Coda Octopus Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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 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 stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
