Is Now An Opportune Moment To Examine Atlas Arteria Limited (ASX:ALX)?

Atlas Arteria Limited (ASX:ALX), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$7.24 at one point, and dropping to the lows of AU$6.28. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Atlas Arteria's current trading price of AU$6.45 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Atlas Arteria’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Atlas Arteria

Is Atlas Arteria still cheap?

According to my valuation model, Atlas Arteria seems to be fairly priced at around 7.34% above my intrinsic value, which means if you buy Atlas Arteria today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth A$6.01, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Atlas Arteria has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Atlas Arteria look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to more than double over the next couple of years, the future seems bright for Atlas Arteria. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? ALX’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ALX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Atlas Arteria as a business, it's important to be aware of any risks it's facing. When we did our research, we found 2 warning signs for Atlas Arteria (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

If you are no longer interested in Atlas Arteria, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.