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Is There Now An Opportunity In Semler Scientific, Inc. (NASDAQ:SMLR)?

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Semler Scientific, Inc. (NASDAQ:SMLR), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQCM. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Semler Scientific’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Semler Scientific

Is Semler Scientific still cheap?

According to my valuation model, Semler Scientific seems to be fairly priced at around 15% below my intrinsic value, which means if you buy Semler Scientific today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $149.91, then there’s not much of an upside to gain from mispricing. In addition to this, Semler Scientific has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Semler Scientific look like?

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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. With profit expected to grow by a double-digit 12% in the upcoming year, the short-term outlook is positive for Semler Scientific. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? SMLR’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on SMLR, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

So while earnings quality is important, it's equally important to consider the risks facing Semler Scientific at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Semler Scientific (including 1 which makes us a bit uncomfortable).

If you are no longer interested in Semler Scientific, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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