Is It Time to Consider Buying Harmonic Inc. (NASDAQ:HLIT)?

Harmonic Inc. (NASDAQ:HLIT) isn’t the largest company out there, but its stock price is up 37% over the past two months on the NASDAQGS. Shareholders may appreciate the recent price rally, but the company still has a ways to go before it hits its yearly highs again. As a stock that’s widely covered by analysts, it’s safe to assume that any recent changes in the company’s outlook are already factored into the stock price. But what if there’s still a buying opportunity? Let’s take a look at Harmonic’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Harmonic

What is the value of the harmonic?

Great news for investors: Harmonic 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. We used the price-to-earnings ratio in this case because there is not enough visibility to forecast its cash flows. The stock’s 20.7x is currently well below the industry average of 27.87x, meaning it is trading at a discount to its peers. Harmonic’s stock price also appears relatively stable relative to the rest of the market, as indicated by its low beta. If you believe the stock price should eventually reach that of its industry peers, a low beta could suggest that it is unlikely to do so quickly in the near future, and once it does, it could be difficult to fall back into an attractive buying range.

Can we expect growth from Harmonic?

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Buying a great company with a solid outlook at a cheap price is always a good investment, so let’s also look at the company’s future expectations. However, in Harmonic’s case, it is expected to generate negative earnings growth of -12%, which doesn’t help strengthen its investment thesis. It seems that the risk of future uncertainty is high, at least in the short term.

What this means for you

Are you a shareholder? Although HLIT is currently trading below the industry’s price-to-earnings ratio, the negative earnings outlook brings with it some uncertainty, which equates to higher risk. We recommend that you consider whether you want to increase your portfolio’s exposure to HLIT or whether diversifying to another stock might be a better decision for your total risk and return.

Are you a potential investor? If you’ve been following HLIT for a while but are hesitant to take the plunge, we recommend taking a closer look at the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks associated with negative growth prospects going forward.

If you want to learn more about Harmonic as a company, it’s important to be aware of the risks it faces. For example, we discovered 3 warning signs which you should go through with your eyes to get a better picture of Harmonic.

If you are no longer interested in Harmonic, 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 using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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