At US$45.20, Is It Time To Put Rush Enterprises, Inc. (NASDAQ:RUSH.A) On Your Watch List?

While Rush Enterprises, Inc. (NASDAQ:RUSH.A) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$52.52 and falling to the lows of US$41.17. 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 Rush Enterprises' current trading price of US$45.20 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 Rush Enterprises’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 Rush Enterprises

What's The Opportunity In Rush Enterprises?

Great news for investors – Rush Enterprises is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 10.83x is currently well-below the industry average of 16.57x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because Rush Enterprises’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.

What kind of growth will Rush Enterprises generate?

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. However, with a negative profit growth of -20% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Rush Enterprises. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although RUSH.A is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to RUSH.A, 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 RUSH.A for some time, but hesitant on making the leap, we recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Rush Enterprises as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for Rush Enterprises (1 is a bit unpleasant) you should be familiar with.

If you are no longer interested in Rush Enterprises, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com