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LivaNova PLC (NASDAQ:LIVN), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$50.73 and falling to the lows of US$33.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether LivaNova's current trading price of US$35.46 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at LivaNova’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is LivaNova Still Cheap?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 30.48x is currently trading slightly above its industry peers’ ratio of 29.13x, which means if you buy LivaNova today, you’d be paying a relatively sensible price for it. And if you believe that LivaNova should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like LivaNova’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
View our latest analysis for LivaNova
What kind of growth will LivaNova generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to more than double over the next couple of years, the future seems bright for LivaNova. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? LIVN’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at LIVN? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?