What Does ShotSpotter, Inc.'s (NASDAQ:SSTI) Share Price Indicate?

·3 min read

While ShotSpotter, Inc. (NASDAQ:SSTI) might not be the most widely known stock at the moment, it led the NASDAQCM gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at ShotSpotter’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for ShotSpotter

What Is ShotSpotter Worth?

According to my valuation model, the stock is currently overvalued by about 38%, trading at US$33.26 compared to my intrinsic value of $24.08. This means that the opportunity to buy ShotSpotter at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that ShotSpotter’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 kind of growth will ShotSpotter generate?

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

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 revenues expected to grow by 32% over the next year, the future seems bright for ShotSpotter. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock in the upcoming year, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? SSTI’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SSTI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SSTI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for SSTI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into ShotSpotter, you'd also look into what risks it is currently facing. While conducting our analysis, we found that ShotSpotter has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in ShotSpotter, 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.

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