Stock Analysis

Is AgroFresh Solutions, Inc. (NASDAQ:AGFS) Potentially Undervalued?

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NasdaqGS:AGFS
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AgroFresh Solutions, Inc. (NASDAQ:AGFS), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at AgroFresh Solutions’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for AgroFresh Solutions

What's the opportunity in AgroFresh Solutions?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14.79% above my intrinsic value, which means if you buy AgroFresh Solutions today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $1.93, there’s only an insignificant downside when the price falls to its real value. In addition to this, AgroFresh Solutions has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from AgroFresh Solutions?

earnings-and-revenue-growth
NasdaqGS:AGFS Earnings and Revenue Growth April 28th 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. 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. AgroFresh Solutions' earnings over the next few years are expected to increase by 60%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? AGFS’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 AGFS, 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. While conducting our analysis, we found that AgroFresh Solutions has 2 warning signs and it would be unwise to ignore them.

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What are the risks and opportunities for AgroFresh Solutions?

AgroFresh Solutions, Inc. provides science-based solutions, data-driven technologies, and high-touch customer services.

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Rewards

  • Trading at 5.4% below our estimate of its fair value

  • Revenue is forecast to grow 9.9% per year

Risks

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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AgroFresh Solutions

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