Is Now The Time To Look At Buying LifeVantage Corporation (NASDAQ:LFVN)?
LifeVantage Corporation (NASDAQ:LFVN), might not be a large cap stock, but it saw a significant share price rise of 30% in the past couple of months on the NASDAQCM. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a small cap stock, hardly covered by any analysts, 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? Today we will analyse the most recent data on LifeVantage’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for LifeVantage
What's The Opportunity In LifeVantage?
LifeVantage appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that LifeVantage’s ratio of 29.94x is above its peer average of 24.49x, which suggests the stock is trading at a higher price compared to the Personal Products industry. Furthermore, LifeVantage’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from LifeVantage?
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 relatively muted revenue growth of 7.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for LifeVantage, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in LFVN’s outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe LFVN should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on LFVN for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Be aware that LifeVantage is showing 3 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable...
If you are no longer interested in LifeVantage, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
