What Does Sigma Designs Inc’s (SIGM) Share Price Indicate?
Sigma Designs Inc (NASDAQ:SIGM), a semiconductors and semiconductor 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 $6.7 at one point, and dropping to the lows of $5.65. 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 SIGM's current trading price of $5.8 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 SIGM’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 SIGM
Is SIGM still cheap?
Great news for investors – SIGM is still trading at a fairly cheap price. In this instance, I’ve used price-to-book ratio (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that SIGM’s ratio of 1.8x is below its peer average of 5.3x, which suggests the stock is undervalued compared to the semiconductors and semiconductor equipment industry. What’s more interesting is that, SIGM’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much SIGM moves relative to the rest of the market.
Can we expect growth from SIGM?
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. In the upcoming year, SIGM’s earnings are expected to increase by 43.45%, 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? Since SIGM is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on SIGM for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SIGM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Sigma Designs. You can find everything you need to know about SIGM in the latest infographic research report. If you are no longer interested in Sigma Designs, 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.
