New Zealand markets closed
  • NZX 50

    11,730.52
    -29.49 (-0.25%)
     
  • NZD/USD

    0.6440
    +0.0009 (+0.14%)
     
  • NZD/EUR

    0.6256
    +0.0030 (+0.49%)
     
  • ALL ORDS

    7,288.80
    -36.60 (-0.50%)
     
  • ASX 200

    7,032.50
    -38.50 (-0.54%)
     
  • OIL

    92.71
    -1.63 (-1.73%)
     
  • GOLD

    1,803.90
    -3.30 (-0.18%)
     
  • NASDAQ

    13,291.99
    -86.33 (-0.65%)
     
  • FTSE

    7,485.28
    +19.37 (+0.26%)
     
  • Dow Jones

    33,336.67
    +27.16 (+0.08%)
     
  • DAX

    13,759.53
    +65.02 (+0.47%)
     
  • Hang Seng

    20,175.62
    +93.19 (+0.46%)
     
  • NIKKEI 225

    28,546.98
    +727.65 (+2.62%)
     
  • NZD/JPY

    85.9680
    +0.4810 (+0.56%)
     

At US$27.82, Is Cohu, Inc. (NASDAQ:COHU) Worth Looking At Closely?

·3-min read

Cohu, Inc. (NASDAQ:COHU), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$32.13 at one point, and dropping to the lows of US$25.47. 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 Cohu's current trading price of US$27.82 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 Cohu’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Cohu

What's the opportunity in Cohu?

Great news for investors – Cohu is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Cohu’s ratio of 8.39x is below its peer average of 18.43x, which indicates the stock is trading at a lower price compared to the Semiconductor industry. However, given that Cohu’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Cohu look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Cohu, at least in the near future.

What this means for you:

Are you a shareholder? Although COHU 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 COHU, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on COHU for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, Cohu has 3 warning signs (and 1 which can't be ignored) we think you should know about.

If you are no longer interested in Cohu, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting