HeartCore Enterprises, Inc. (NASDAQ:HTCR), might not be a large cap stock, but it saw a significant share price rise of 130% in the past couple of months on the NASDAQCM. The company is inching closer to its yearly highs following the recent share price climb. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine HeartCore Enterprises’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for HeartCore Enterprises

What's The Opportunity In HeartCore Enterprises?

Great news for investors – HeartCore Enterprises is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that HeartCore Enterprises’s ratio of 6x is below its peer average of 42.43x, which indicates the stock is trading at a lower price compared to the Software industry. However, given that HeartCore Enterprises’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 HeartCore Enterprises look like?

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 a negative profit growth of -8.1% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for HeartCore Enterprises. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although HTCR 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 HTCR, 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 HTCR for some time, but hesitant on making the leap, we recommend you dig deeper 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, HeartCore Enterprises has 5 warning signs (and 3 which are significant) we think you should know about.

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

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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.