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Does Cardiovascular Systems, Inc. (NASDAQ:CSII) Have A Particularly Volatile Share Price?

Simply Wall St

Anyone researching Cardiovascular Systems, Inc. (NASDAQ:CSII) might want to consider the historical volatility of the share price. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. 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.

Some stocks are more sensitive to general market forces than others. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

View our latest analysis for Cardiovascular Systems

What does CSII's beta value mean to investors?

Given that it has a beta of 1.69, we can surmise that the Cardiovascular Systems share price has been fairly sensitive to market volatility (over the last 5 years). Based on this history, investors should be aware that Cardiovascular Systems are likely to rise strongly in times of greed, but sell off in times of fear. Beta is worth considering, but it's also important to consider whether Cardiovascular Systems is growing earnings and revenue. You can take a look for yourself, below.

NasdaqGS:CSII Income Statement, September 6th 2019

How does CSII's size impact its beta?

Cardiovascular Systems is a small company, but not tiny and little known. It has a market capitalisation of US$1.6b, which means it would be on the radar of intstitutional investors. It is quite common to see a small-cap stock with a beta greater than one. In part, that's because relatively few investors can influence the price of a smaller company, compared to a large company.

What this means for you:

Since Cardiovascular Systems tends to moves up when the market is going up, and down when it's going down, potential investors may wish to reflect on the overall market, when considering the stock. In order to fully understand whether CSII is a good investment for you, we also need to consider important company-specific fundamentals such as Cardiovascular Systems’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 CSII’s future growth? Take a look at our free research report of analyst consensus for CSII’s outlook.
  2. Past Track Record: Has CSII 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 CSII's historicals for more clarity.
  3. Other Interesting Stocks: It's worth checking to see how CSII measures up against other companies on valuation. You could start with this free list of prospective options.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.