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What Does Amkor Technology, Inc.'s (NASDAQ:AMKR) Share Price Indicate?

Simply Wall St

Amkor Technology, Inc. (NASDAQ:AMKR), which is in the semiconductor business, and is based in United States, received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. As a US$2.9b market-cap stock, it seems odd Amkor Technology is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Amkor Technology’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Amkor Technology

What is Amkor Technology worth?

Amkor Technology appears to be overvalued according to my relative valuation model. 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 Amkor Technology’s ratio of 59.01x is above its peer average of 30.33x, which suggests the stock is overvalued compared to the Semiconductor industry. But, is there another opportunity to buy low in the future? Since Amkor Technology’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Amkor Technology look like?

NasdaqGS:AMKR Past and Future Earnings, December 2nd 2019

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. Amkor Technology’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in AMKR’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe AMKR should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. 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 AMKR for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for AMKR, which means it’s worth diving deeper into other factors 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 Amkor Technology. You can find everything you need to know about Amkor Technology in the latest infographic research report. If you are no longer interested in Amkor Technology, 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.