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What You Must Know About Energous Corporation's (NASDAQ:WATT) Beta Value

Simply Wall St



See our latest analysis for Energous

What does WATT's beta value mean to investors?

Given that it has a beta of 1.74, we can surmise that the Energous share price has been fairly sensitive to market volatility (over the last 5 years). If this beta value holds true in the future, Energous shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. 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 Energous's revenue and earnings in the image below.

NasdaqCM:WATT Income Statement, September 23rd 2019

How does WATT's size impact its beta?

With a market capitalisation of US$119m, Energous is a very small company by global standards. It is quite likely to be unknown to most investors. It has a relatively high beta, suggesting it is fairly actively traded for a company of its size. Because it takes less capital to move the share price of a small company like this, when a stock this size is actively traded it is quite often more sensitive to market volatility than similar large companies.

What this means for you:

Since Energous has a reasonably high beta, it's worth considering why it is so heavily influenced by broader market sentiment. For example, it might be a high growth stock or have a lot of operating leverage in its business model. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Energous’s financial health and performance track record. I highly recommend you dive deeper by considering the following:

  1. Future Outlook: What are well-informed industry analysts predicting for WATT’s future growth? Take a look at our free research report of analyst consensus for WATT’s outlook.
  2. Past Track Record: Has WATT 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 WATT's historicals for more clarity.
  3. Other Interesting Stocks: It's worth checking to see how WATT measures up against other companies on valuation. You could start with this free list of prospective options.

