Is Now An Opportune Moment To Examine Evoqua Water Technologies Corp. (NYSE:AQUA)?

Evoqua Water Technologies Corp. (NYSE:AQUA), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Evoqua Water Technologies’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Evoqua Water Technologies

Is Evoqua Water Technologies Still Cheap?

According to my valuation model, Evoqua Water Technologies seems to be fairly priced at around 18.46% above my intrinsic value, which means if you buy Evoqua Water Technologies today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $30.61, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Evoqua Water Technologies’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

What kind of growth will Evoqua Water Technologies generate?

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. Evoqua Water Technologies' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in AQUA’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 the stock? 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 AQUA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Evoqua Water Technologies at this point in time. For example, Evoqua Water Technologies has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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.

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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.