Is Astronics Corporation (NASDAQ:ATRO) Potentially Undervalued?

By
Simply Wall St
Published
November 26, 2021
NasdaqGS:ATRO
Source: Shutterstock

While Astronics Corporation (NASDAQ:ATRO) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$14.84 and falling to the lows of US$11.42. 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 Astronics' current trading price of US$11.42 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Astronics’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 Astronics

What is Astronics worth?

Astronics appears to be overvalued by 21% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$11.42 on the market compared to my intrinsic value of $9.44. This means that the opportunity to buy Astronics at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Astronics’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Astronics?

earnings-and-revenue-growth
NasdaqGS:ATRO Earnings and Revenue Growth November 27th 2021

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. With revenues expected to grow by 42% over the next couple of years, the future seems bright for Astronics. If the level of expenses is able to be maintained, 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? It seems like the market has well and truly priced in ATRO’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ATRO should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ATRO for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ATRO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Astronics as a business, it's important to be aware of any risks it's facing. Our analysis shows 3 warning signs for Astronics (1 is concerning!) and we strongly recommend you look at them before investing.

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

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