What Is Orion Energy Systems, Inc.'s (NASDAQ:OESX) Share Price Doing?

While Orion Energy Systems, Inc. (NASDAQ:OESX) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQCM over the last few months, increasing to US$2.11 at one point, and dropping to the lows of US$1.65. 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 Orion Energy Systems' current trading price of US$1.71 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 Orion Energy Systems’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Orion Energy Systems

What's The Opportunity In Orion Energy Systems?

Orion Energy Systems appears to be overvalued by 37% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$1.71 on the market compared to my intrinsic value of $1.25. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Orion Energy Systems’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Orion Energy Systems?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In the upcoming year, Orion Energy Systems' earnings are expected to increase by 60%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? OESX’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe OESX 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 OESX 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 OESX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Orion Energy Systems at this point in time. While conducting our analysis, we found that Orion Energy Systems has 2 warning signs and it would be unwise to ignore them.

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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.