At US$43.49, Is Evoqua Water Technologies Corp. (NYSE:AQUA) Worth Looking At Closely?

Evoqua Water Technologies Corp. (NYSE:AQUA), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Evoqua Water Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Evoqua Water Technologies

Is Evoqua Water Technologies still cheap?

The stock is currently trading at US$43.49 on the share market, which means it is overvalued by 32% compared to my intrinsic value of $32.95. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Evoqua Water Technologies’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.

What does the future of Evoqua Water Technologies look like?

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. With profit expected to more than double over the next couple of years, the future seems bright for Evoqua Water Technologies. 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? AQUA’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe AQUA 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 tabs on AQUA for some time, 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 AQUA, 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 Evoqua Water Technologies as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Evoqua Water Technologies you should be aware of.

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

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

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.