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Here’s why Altium shares sank more than 5% in October

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The Altium Limited (ASX: ALU) share price dipped 5.69% in the month of October.

Altium shares started last month at $34.12 a share but closed the month down more than 5% at $32.18, which is where they have stayed during trade today. However, Altium is still closer to its 52-week high of $38.49 than its 52-week low of $19.73.

Why did Altium come off the boil last month?

Altium provides its Altium Design software for the engineering and design of printed circuit boards. The vast majority of electronic devices require these circuit boards, and Altium’s product endeavours to streamline and simplify the manufacturing process. It has proved wildly popular in the electrical engineering industry, with Altium reporting subscriber seats growth of 27% last financial year.

As one of the high-growth WAAAX shares, Altium has still had a fantastic 2019 so far. ALU shares started off the year at $21.61, meaning the stock is still up nearly 50%, year to date, on today’s prices.

There has been no specific catalyst for the halt in Altium’s share price growth, therefore I feel that the market has found a place of fair value for the stock at its current price for the current time.

Is Altium a buy today?

From looking at Altium’s raw numbers, I don’t find any problems with the company. In its most recent FY19 results, Altium reported revenue growth of 22.6% year-on-year as well as earnings growth of 39.8% – leading to earnings per share growth of 40.5%.

On its current share price, Altium is trading for almost 55 times its earnings. This is still expensive, but perhaps justified if Altium can keep these phenomenal growth numbers at a similar level. I would keep an eye on Altium shares for now, but any share price dips could be a lucrative buying opportunity in the future.

The post Here’s why Altium shares sank more than 5% in October appeared first on Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019

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