Is It Time To Buy Trillium Therapeutics Inc (TRIL)?
Trillium Therapeutics Inc (NASDAQ:TRIL), a biotechnology company based in Canada, led the NasdaqCM gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at TRIL’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for TRIL
What’s the opportunity in TRIL?
According to my relative valuation model, the stock is currently overvalued. 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 TRIL’s ratio of 10.8x is above its peer average of 3.7x, which suggests the stock is overvalued compared to the biotechnology industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since TRIL’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much TRIL moves relative to the rest of the market.
What kind of growth will TRIL generate?
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 -17.96% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for TRIL. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? If you believe TRIL is currently trading above its peers, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 TRIL for a while, now may not be the best time to enter into the stock. Price climbed passed its industry peers, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Trillium Therapeutics. You can find everything you need to know about TRIL in the latest infographic research report. If you are no longer interested in Trillium Therapeutics, 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.
