Atomera Incorporated (NASDAQ:ATOM), is a USD$32.71M small-cap, which operates in the tech hardware industry based in United States. Technology has become a vital component of every industry, bringing unprecedented opportunities for growth, along with challenges and competition. Tech analysts are forecasting for the entire hardware tech industry, a positive double-digit growth of 16.29% in the upcoming year , and a whopping growth of 44.22% over the next couple of years. However this rate still came in below the growth rate of the US stock market as a whole. Today, I’ll take you through the tech sector growth expectations, as well as evaluate whether ATOM is lagging or leading in the industry. View our latest analysis for Atomera
What’s the catalyst for ATOM’s sector growth?
Despite all the opportunities, tech companies still face a host of challenges, including coping with an increasingly burdensome global regulation. Since the regulatory environment is unlikely to become less complex, organizations will need to address the constantly evolving rules for governing privacy, security and handling of data, as well as cybersecurity issues. Over the past year, the industry saw growth in the thirties, beating the US market growth of 10.30%. ATOM lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means ATOM may be trading cheaper than its peers.
Is ATOM and the sector relatively cheap?
Tech hardware companies are typically trading at a PE of 25x, in-line with the US stock market PE of 22x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 12.91% compared to the market’s 10.06%, potentially illustrative of past tailwinds. Since ATOM’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge ATOM’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? ATOM recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto ATOM as part of your portfolio. However, if you’re relatively concentrated in tech, you may want to value ATOM based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If ATOM has been on your watchlist for a while, now may be the time to enter into the stock, if you like its ability to deliver growth and are not highly concentrated in the tech industry. Before you make a decision on the stock, take a look at ATOM’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Atomera’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other tech stocks instead? Use our free playform to see my list of over 1000 other tech companies trading on the market.
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.