While Semler Scientific, Inc. (NASDAQ:SMLR) might not have the largest market cap around, it saw a decent share price growth of 12% on the NASDAQCM over the last few months. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps see more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let's take a look at Semler Scientific's outlook and value based on the most recent financial data to see if the opportunity still exists.
Great news for investors - Semler Scientific is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. We find that Semler Scientific's ratio of 12.74x is below its peer average of 27.85x, which indicates the stock is trading at a lower price compared to the Medical Equipment industry. What's more interesting is that Semler Scientific'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.
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Semler Scientific, at least in the near future.
Are you a shareholder? Although SMLR is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to SMLR or whether diversifying into another stock may be a better move for your total risk and return.