When Should You Buy IAA, Inc. (NYSE:IAA)?

IAA, Inc. (NYSE:IAA), 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. 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? Let’s examine IAA’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for IAA

What is IAA worth?

Good news, investors! IAA is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $53.98, but it is currently trading at US$37.90 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, IAA’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from IAA?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted profit growth of 8.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for IAA, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since IAA is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

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

If you want to dive deeper into IAA, you'd also look into what risks it is currently facing. While conducting our analysis, we found that IAA has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in IAA, 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.