What Kind Of Share Price Volatility Should You Expect For Sapiens International Corporation N.V. (NASDAQ:SPNS)?
If you’re interested in Sapiens International Corporation N.V. (NASDAQ:SPNS), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
What does SPNS’s beta value mean to investors?
Zooming in on Sapiens International, we see it has a five year beta of 1.34. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market the market. Based on this history, investors should be aware that Sapiens International are likely to rise strongly in times of greed, but sell off in times of fear. Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. You can see Sapiens International’s revenue and earnings in the image below.
Does SPNS’s size influence the expected beta?
Sapiens International is a small cap stock with a market capitalisation of US$537m. Most companies this size are actively traded. It’s not particularly surprising that it has a higher beta than the overall market. That’s because it takes less money to influence the share price of a smaller company, than a bigger company.
Future Outlook: What are well-informed industry analysts predicting for SPNS’s future growth? Take a look at our free research report of analyst consensus for SPNS’s outlook.
Past Track Record: Has SPNS been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of SPNS’s historicals for more clarity.
Other Interesting Stocks: It’s worth checking to see how SPNS measures up against other companies on valuation. You could start with this free list of prospective options.