RadNet, Inc. (NASDAQ:RDNT), which is in the healthcare business, and is based in United States, saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$15.23 and falling to the lows of US$13.31. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether RadNet's current trading price of US$13.91 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 RadNet’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is RadNet worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.17% above my intrinsic value, which means if you buy RadNet today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $12.98, there’s only an insignificant downside when the price falls to its real value. What's more, RadNet’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of RadNet look like?
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 -16% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for RadNet. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? RDNT seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on RDNT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on RDNT should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on RadNet. You can find everything you need to know about RadNet in the latest infographic research report. If you are no longer interested in RadNet, 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 email@example.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.