The ExOne Company (NASDAQ:XONE), a machinery company based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on ExOne’s outlook and valuation to see if the opportunity still exists. View our latest analysis for ExOne
What’s the opportunity in ExOne?According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 1.91x is currently trading slightly below its industry peers’ ratio of 2.61x, which means if you buy ExOne today, you’d be paying a relatively reasonable price for it. And if you believe ExOne should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because ExOne’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 ExOne generate?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. 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. With profit expected to grow by 64.45% over the next year, the near-term future seems bright for ExOne. It looks like higher cash flows 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 already priced in XONE’s positive outlook, 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 XONE? 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 XONE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for XONE, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on ExOne. You can find everything you need to know about ExOne in the latest infographic research report. If you are no longer interested in ExOne, you can use our free platform to see my list of over 50 other stocks with a high growth potential.