At US $ 134, is it time to put InMode Ltd. (NASDAQ: INMD) on your watch list?
Although InMode Ltd. (NASDAQ: INMD) may not be the most well-known stock yet, it has led the NASDAQGS winners with a relatively large price hike over the past two weeks. With many analysts covering mid-cap stocks, we can expect any price-sensitive announcement to have already factored into the share price. However, could the stock still trade for a relatively cheap price? Today, I’m going to analyze the most recent data on InMode’s outlook and valuation to see if the opportunity still exists.
See our latest review for InMode
What is the opportunity in InMode?
Good news for investors – InMode is still trading fairly low under my multiple pricing model, where I compare the company’s price-to-earnings ratio to the industry average. I used the price / earnings ratio in this case because there is not enough visibility to forecast its cash flow. The stock’s ratio of 40.43x is currently well below the industry average of 57.28x, meaning it is trading at a lower price than its peers. What’s more interesting is that the InMode share price is quite volatile, which gives us more chances to buy as the stock price could go down (or up) in the future. This is based on its high beta, which is a good indicator of how the stock is moving relative to the rest of the market.
What kind of growth will InMode generate?
Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. While value investors argue that intrinsic value versus price matters most, a more compelling investment thesis would be high growth potential at a cheap price. With earnings expected to grow in double digits by 17% over the next two years, the outlook is positive for InMode. It looks like a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you:
Are you a shareholder? Since the INMD is currently trading below the industry PE ratio, perhaps now is a great time to build up more of your holdings in the stock. With optimistic earnings prospects on the horizon, it seems that this growth has not yet been fully reflected in the share price. However, there are also other factors such as financial health to consider which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on INMD for a while, now might be the time to take the plunge. Its prospects for prosperous future earnings are not yet fully reflected in the current share price, which means it is not too late to buy INMD. But before making any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
If you want to learn more about InMode as a business, it’s important to be aware of the risks it faces. In terms of investment risks, we have identified 2 warning signs with InMode, and understanding them should be part of your investment process.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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