Is It Time To Consider Buying US Ecology, Inc. (NASDAQ:ECOL)?

By
Simply Wall St
Published
September 20, 2021
NasdaqGS:ECOL
Source: Shutterstock

While US Ecology, Inc. (NASDAQ:ECOL) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$38.18 at one point, and dropping to the lows of US$33.57. 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 US Ecology's current trading price of US$33.57 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 US Ecology’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for US Ecology

What is US Ecology worth?

Good news, investors! US Ecology is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $47.93, but it is currently trading at US$33.57 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because US Ecology’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 US Ecology generate?

earnings-and-revenue-growth
NasdaqGS:ECOL Earnings and Revenue Growth September 21st 2021

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. 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 revenues expected to grow by a double-digit 17% over the next couple of years, the outlook is positive for US Ecology. If the level of expenses is able to be maintained, 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? Since ECOL is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ECOL for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ECOL. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

Diving deeper into the forecasts for US Ecology mentioned earlier will help you understand how analysts view the stock going forward. So feel free to check out our free graph representing analyst forecasts.

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