Yahoo Finance At US$03.99, Is It Time To Buy TransEnterix Inc (NYSEMKT:TRXC)?
TransEnterix Inc (NYSEMKT:TRXC), a medical equipment company based in United States, saw a significant share price rise of over 20% in the past couple of months on the AMEX. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on TransEnterix’s outlook and valuation to see if the opportunity still exists. See our latest analysis for TransEnterix
What is TransEnterix worth?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-book (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 TransEnterix’s ratio of 4.3x is trading slightly below its industry peers’ ratio of 4.39x, which means if you buy TransEnterix today, you’d be paying a relatively fair price for it. And if you believe that TransEnterix should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that TransEnterix’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will TransEnterix generate?
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. TransEnterix’s earnings over the next few years are expected to increase by 58.94%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in TRXC’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at TRXC? 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 TRXC, 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 TRXC, 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 TransEnterix. You can find everything you need to know about TransEnterix in the latest infographic research report. If you are no longer interested in TransEnterix, 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.
