Shares of Synaptics Incorporated (NASDAQ: SYNA) are receiving a lot of investor interest as of late due to the stock’s 16.8% increase over the last month. Shareholders are now asking themselves whether the company’s current stock price is reflective of its true value or if shares have even further upside from here.
Let’s take a look at Synaptics Incorporated’s value and outlook based on its most recent financial data to see if there are any catalysts for a price change.
What Is Synaptics Incorporated Worth?
Welcoming news for investors, Synaptics Incorporated is still trading at a fairly cheap price. According to our 5 valuation analyses, the intrinsic value for the stock is $61.12 per share and is currently trading at $53.83 in the market. This means that there is still an opportunity to buy now.
|Analysis||Model Fair Value||Upside (Downside)|
|Peer Revenue Multiples||$62.03||15.2%|
|Peer EBITDA Multiples||$43.75||-18.7%|
|10-yr DCF Growth Exit||$71.10||32.1%|
|5-yr DCF Growth Exit||$69.32||28.8%|
|Earnings Power Value||$59.40||10.3%|
Click on any of the analyses above to view the latest model with real-time data.
Synaptics Incorporated’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta of 0.59. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
How Much Growth Will Synaptics Incorporated Generate?
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.
source: finbox.io data explorer
With Synaptics Incorporated’s relatively muted EBITDA growth of 8.2% expected over the next five years on average, growth doesn’t seem like a key catalyst for a buying decision, at least in the short to medium-term.
While many investors tend to categorize stocks as either value or growth plays, the most successful investors view growth in conjunction with a company’s value. Take legendary investor Peter Lynch for example, who is widely known for popularizing the term growth at a reasonable price (GARP).
GARP is a strategy that combines aspects of both growth and value investing techniques by finding high growth companies that don’t trade at overly high valuations. In the application of this strategy, Lynch achieved 29% annualized returns as the manager of Fidelity’s Magellan Fund from 1977 to 1990. Needless to say the importance of analyzing a company’s fair value in addition to its growth prospects.
Although Synaptics Incorporated’s future growth is relatively low, the company’s stock still appears to be trading at a discount to its intrinsic value. Therefore, it may be a great time to purchase shares or add more to your existing holdings.
However, if you have not done so already, I highly recommend you complete your research on Synaptics Incorporated by taking a look at the following:
Efficiency Metrics: fixed asset turnover is calculated by dividing revenue by average fixed assets. View Synaptics Incorporated’s fixed asset turnover here.
Risk Metrics: how much interest coverage does Synaptics Incorporated have? This is a ratio used to assess a firm’s ability to pay interest expenses based on operating profits (EBIT). View the company’s interest coverage here.
Valuation Metrics: what is Synaptics Incorporated’s short ratio and how does it compare to its publicly traded peers? It represents the percentage of total shares outstanding that is being shorted. View the short ratio here.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.