When Should You Buy Brooks Automation, Inc. (NASDAQ: BRKS)?
Brooks Automation, Inc. (NASDAQ: BRKS), is not the biggest company in the market, but it has received a lot of attention due to a substantial increase in NASDAQGS prices in recent months. As a mid-cap stock with high analyst coverage, you can assume that any recent change in the outlook for the company is already built into the stock price. However, what if the stock is still a good deal? Today I will analyze the most recent outlook and valuation data from Brooks Automation to see if the opportunity still exists.
Check out our latest review for Brooks Automation
Is Brooks Automation still cheap?
Brooks Automation is currently expensive based on my multiple pricing model, where I look at the company’s price / earnings ratio relative 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 63.54x is currently well above the industry average of 29.77x, meaning it is trading at a higher price relative to its peers. But is there another opportunity to buy low in the future? Since Brooks Automation’s stock price is quite volatile, this could mean that it may fall (or rise even more) in the future, giving us another chance to invest. 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 Brooks Automation generate?
Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s take a look at the future expectations of the business as well. With expected earnings growth of 79% over the next two years, the future looks bright for Brooks Automation. 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? BRKS ‘bullish future growth appears to have been factored into the current stock price, with stocks trading above industry price multiples. At this current price, shareholders may ask a different question: should I sell? If you think BRKS should trade below its current price, selling high and buying it back when its price drops to the industry’s PE ratio can be profitable. But before you make that decision, check to see if its fundamentals have changed.
Are you a potential investor? If you have been keeping an eye on BRKS for a while, it might not be the best time to enter stock. The price has surpassed its industry peers, which means there is likely to be no more benefit due to poor pricing. However, the positive outlook is encouraging for BRKS, which means that it is worth exploring other factors in order to take advantage of the next price drop.
So, if you want to dig deeper into this title, it is crucial to take into account the risks it faces. During our analysis, we found that Brooks Automation has 1 warning sign and it would be unwise to ignore it.
If you are no longer interested in Brooks Automation, you can use our free platform to view our list of over 50 other high growth stocks.
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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