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Should You Think About Buying PDF Solutions, Inc. (NASDAQ:PDFS) Now?

While PDF Solutions, Inc. (NASDAQ:PDFS) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$26.18 and falling to the lows of US$18.51. 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 PDF Solutions' current trading price of US$19.31 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 PDF Solutions’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for PDF Solutions

What is PDF Solutions worth?

Great news for investors – PDF Solutions is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $25.61, but it is currently trading at US$19.31 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because PDF Solutions’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of PDF Solutions look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In PDF Solutions' case, its revenues over the next few years are expected to grow by 47%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since PDFS is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PDFS for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PDFS. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you'd like to know more about PDF Solutions as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for PDF Solutions and we think they deserve your attention.

If you are no longer interested in PDF Solutions, 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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