Is It Too Late To Consider Buying Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC)?
Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$58.26 and falling to the lows of US$47.97. 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 Kulicke and Soffa Industries' current trading price of US$48.97 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Kulicke and Soffa Industries’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Kulicke and Soffa Industries
Is Kulicke and Soffa Industries Still Cheap?
Great news for investors – Kulicke and Soffa Industries is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Kulicke and Soffa Industries’s ratio of 8.83x is below its peer average of 18.62x, which indicates the stock is trading at a lower price compared to the Semiconductor industry. However, given that Kulicke and Soffa Industries’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Kulicke and Soffa Industries look like?
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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Kulicke and Soffa Industries, at least in the near future.
What This Means For You
Are you a shareholder? Although KLIC is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to KLIC, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on KLIC for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
So while earnings quality is important, it's equally important to consider the risks facing Kulicke and Soffa Industries at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Kulicke and Soffa Industries (including 1 which is a bit unpleasant).
If you are no longer interested in Kulicke and Soffa Industries, 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.
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