Is Now The Time To Look At Buying AgroFresh Solutions, Inc. (NASDAQ:AGFS)?

By
Simply Wall St
Published
August 27, 2021
NasdaqGS:AGFS
Source: Shutterstock

While AgroFresh Solutions, Inc. (NASDAQ:AGFS) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine AgroFresh Solutions’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See 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 5.41% 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 that the stock is really worth $1.95, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, AgroFresh Solutions’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will AgroFresh Solutions generate?

earnings-and-revenue-growth
NasdaqGS:AGFS Earnings and Revenue Growth August 28th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 profit expected to grow by 70% over the next couple of years, the future seems bright for AgroFresh Solutions. 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? 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 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 AGFS, 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.

So while earnings quality is important, it's equally important to consider the risks facing AgroFresh Solutions at this point in time. Case in point: We've spotted 1 warning sign for AgroFresh Solutions you should be aware of.

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

If you’re looking to trade AgroFresh Solutions, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.