While GoPro, Inc. (NASDAQ:GPRO) may not be the best-known stock right now, it has seen decent teen-level stock price growth on the NASDAQGS over the past of the last few months. As a stock with high analyst coverage, you can assume that any recent changes in the company’s outlook are already priced into the stock. However, could the stock still trade at a relatively cheap price? Let’s take a closer look at GoPro’s valuation and outlook to see if there’s still a bargain opportunity.
See our latest review for GoPro
What is the opportunity in GoPro?
Good news for investors – GoPro is still trading at a fairly cheap price according to my multiple price 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 predict its cash flow. The stock’s ratio of 3.69x is currently well below the industry average of 9.05x, meaning it is trading at a lower price than its peers. However, given that GoPro’s share is quite volatile (meaning its price movements are amplified relative to the rest of the market), this could mean that the price may drop, giving us another chance to dip. to buy in the future. This is based on its high beta, which is a good indicator of stock price volatility.
What kind of growth will GoPro 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 big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Although in GoPro’s case, it’s expected to post very negative earnings growth over the next few years, which doesn’t help bolster its investment thesis. It seems that the risk of future uncertainty is high, at least in the short term.
What does this mean to you :
Are you a shareholder? Although GPRO is currently trading below the industry PE ratio, the negative earnings outlook brings some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio’s exposure to GPRO or whether diversifying into another security may be a better decision for your total risk and return.
Are you a potential investor? If you’ve been keeping your eye on GPRO for a while, but are hesitant to take the plunge, I recommend digging deeper into the stock. Given its current price multiple, now is the perfect time to make a decision. But keep in mind the risks that come with a negative growth outlook going forward.
If you want to learn more about GoPro as a company, it’s important to be aware of the risks it faces. Example: we have identified 4 warning signs for GoPro you need to be aware of them and 2 of them cannot be ignored.
If you are no longer interested in GoPro, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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