At US$13.68, Is It Time To Put Tactile Systems Technology, Inc. (NASDAQ:TCMD) On Your Watch List?
Tactile Systems Technology, Inc. (NASDAQ:TCMD), might not be a large cap stock, but it led the NASDAQGM 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, what if the stock is still a bargain? Let’s take a look at Tactile Systems Technology’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Tactile Systems Technology
Is Tactile Systems Technology Still Cheap?
Good news, investors! Tactile Systems Technology is still a bargain right now according to my price multiple model, which compares 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 Tactile Systems Technology’s ratio of 12.89x is below its peer average of 35.8x, which indicates the stock is trading at a lower price compared to the Medical Equipment industry. What’s more interesting is that, Tactile Systems Technology’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Tactile Systems Technology 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 -13% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Tactile Systems Technology. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although TCMD is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to TCMD, 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 TCMD for some time, but hesitant on making the leap, I recommend you dig deeper 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.
If you'd like to know more about Tactile Systems Technology as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Tactile Systems Technology (including 1 which doesn't sit too well with us).
If you are no longer interested in Tactile Systems Technology, 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.
