Auris Medical Holding AG (NASDAQ:EARS), a pharmaceuticals, biotechnology and life sciences company based in Switzerland, saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGM. Less covered, small-stocks like EARS sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could EARS still be trading at a low price relative to its actual value? Let’s take a look at EARS’s outlook and value based on the most recent financial data to see if the opportunity still exists. View our latest analysis for Auris Medical Holding
What is EARS worth?
Great news for investors – EARS is still trading at a fairly cheap price. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 5.7x is currently well-below the industry average of 10.5x, meaning that it is trading at a cheaper price relative to its peers. EARS’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of EARS 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.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 -3.72% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for EARS. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although EARS is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to EARS, 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 an eye on EARS for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Auris Medical Holding. You can find everything you need to know about EARS in the latest infographic research report. If you are no longer interested in Auris Medical Holding, 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.