CorMedix Inc (AMEX:CRMD), a pharmaceuticals company based in United States, received a lot of attention from a substantial price increase on the AMEX in the over the last few months. Less covered, small-stocks like CRMD sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could CRMD still be trading at a low price relative to its actual value? Let’s take a look at CRMD’s outlook and value based on the most recent financial data to see if the opportunity still exists. View our latest analysis for CorMedix
What is CRMD worth?
Great news for investors – CRMD 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 CRMD’s ratio of 2.5x is below its peer average of 4.8x, which suggests the stock is undervalued compared to the pharmaceuticals industry. Another thing to keep in mind is that CRMD’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from CRMD?
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. However, with a negative profit growth of -2.75% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for CRMD. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although CRMD is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CRMD, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on CRMD for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CorMedix. You can find everything you need to know about CRMD in the latest infographic research report. If you are no longer interested in CorMedix, 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.