Today we're going to take a look at the well-established Agilent Technologies, Inc. (NYSE:A). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$164 at one point, and dropping to the lows of US$145. 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 Agilent Technologies' current trading price of US$145 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Agilent Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Agilent Technologies?
According to my valuation model, Agilent Technologies seems to be fairly priced at around 4.43% above my intrinsic value, which means if you buy Agilent Technologies today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $138.99, there’s only an insignificant downside when the price falls to its real value. Furthermore, Agilent Technologies’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Agilent Technologies?
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. 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. Agilent Technologies' earnings over the next few years are expected to increase by 31%, 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? It seems like the market has already priced in A’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on A, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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 Agilent Technologies at this point in time. In terms of investment risks, we've identified 1 warning sign with Agilent Technologies, and understanding this should be part of your investment process.
If you are no longer interested in Agilent Technologies, 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.