COLTENE Holding AG (VTX:CLTN), which is in the medical equipment business, and is based in Switzerland, saw a decent share price growth in the teens level on the SWX over the last few months. 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 COLTENE Holding’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's the opportunity in COLTENE Holding?
According to my valuation model, COLTENE Holding seems to be fairly priced at around 19.02% above my intrinsic value, which means if you buy COLTENE Holding today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CHF70.75, there’s only an insignificant downside when the price falls to its real value. What's more, COLTENE Holding’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will COLTENE Holding 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. With profit expected to grow by 84% over the next couple of years, the future seems bright for COLTENE Holding. 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? CLTN’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 CLTN, now may not be the most advantageous 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on COLTENE Holding. You can find everything you need to know about COLTENE Holding in the latest infographic research report. If you are no longer interested in COLTENE Holding, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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