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Is GenMark Diagnostics, Inc. (NASDAQ:GNMK) Potentially Undervalued?

Simply Wall St

GenMark Diagnostics, Inc. (NASDAQ:GNMK), which is in the medical equipment business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at GenMark Diagnostics’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for GenMark Diagnostics

What's the opportunity in GenMark Diagnostics?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.48% above my intrinsic value, which means if you buy GenMark Diagnostics today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $6.98, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that GenMark Diagnostics’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will GenMark Diagnostics generate?

NasdaqGM:GNMK Past and Future Earnings, April 24th 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. GenMark Diagnostics’s earnings over the next few years are expected to increase by 57%, 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? GNMK’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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on GNMK, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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 GenMark Diagnostics. You can find everything you need to know about GenMark Diagnostics in the latest infographic research report. If you are no longer interested in GenMark Diagnostics, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.