Why Verra Mobility Corporation (NASDAQ:VRRM) Could Be Worth Watching

Verra Mobility Corporation (NASDAQ:VRRM), is not the largest company out there, but it led the NASDAQCM gainers with a relatively large price hike in the past couple of weeks. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. 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, what if the stock is still a bargain? Let’s examine Verra Mobility’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Verra Mobility

Is Verra Mobility Still Cheap?

According to our valuation model, Verra Mobility seems to be fairly priced at around 10% below our intrinsic value, which means if you buy Verra Mobility today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $25.34, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Verra Mobility’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Verra Mobility 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. Verra Mobility's 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? VRRM’s optimistic future growth appears to have been factored into the current share price, 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 VRRM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

If you'd like to know more about Verra Mobility as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Verra Mobility (of which 1 can't be ignored!) you should know about.

If you are no longer interested in Verra Mobility, 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.