Ituran Location and Control Ltd. (NASDAQ:ITRN), which is in the communications business, and is based in Israel, saw a decent share price growth in the teens level on the NASDAQGS over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Ituran Location and Control’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What’s the opportunity in Ituran Location and Control?
Good news, investors! Ituran Location and Control is still a bargain right now. According to my valuation, the intrinsic value for the stock is $36.37, but it is currently trading at US$25.13 on the share market, meaning that there is still an opportunity to buy now. Ituran Location and Control’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Ituran Location and Control?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -7.0% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Ituran Location and Control. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although ITRN is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ITRN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on ITRN for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ituran Location and Control. You can find everything you need to know about Ituran Location and Control in the latest infographic research report. If you are no longer interested in Ituran Location and Control, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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