What Does Varex Imaging Corporation's (NASDAQ:VREX) Share Price Indicate?

Varex Imaging Corporation (NASDAQ:VREX), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$29.69 and falling to the lows of US$26.36. 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 Varex Imaging's current trading price of US$28.41 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 Varex Imaging’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 Varex Imaging

What's the opportunity in Varex Imaging?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy Varex Imaging today, you’d be paying a fair price for it. And if you believe the company’s true value is $32.80, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Varex Imaging has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Varex Imaging?

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. With revenues expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for Varex Imaging. 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? It seems like the market has already priced in VREX’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 financial strength of the company. 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 an eye on VREX, now may not be the most advantageous 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 want to dive deeper into Varex Imaging, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Varex Imaging and we think they deserve your attention.

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

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.

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