At US$36.15, Is Allied Motion Technologies Inc. (NASDAQ:AMOT) Worth Looking At Closely?

While Allied Motion Technologies Inc. (NASDAQ:AMOT) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NASDAQGM 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 examine Allied Motion Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Allied Motion Technologies

What is Allied Motion Technologies worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 21.3x is currently trading slightly below its industry peers’ ratio of 23.85x, which means if you buy Allied Motion Technologies today, you’d be paying a reasonable price for it. And if you believe Allied Motion Technologies should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Allied Motion Technologies’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Allied Motion Technologies?

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. However, with a relatively muted profit growth of 5.1% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Allied Motion Technologies, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in AMOT’s growth outlook, with shares trading around industry price multiples. 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 AMOT? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on AMOT, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Allied Motion Technologies, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Allied Motion Technologies and we think they deserve your attention.

If you are no longer interested in Allied Motion Technologies, 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.