Is Axcelis Technologies, Inc. (NASDAQ:ACLS) Potentially Undervalued?

While Axcelis Technologies, Inc. (NASDAQ:ACLS) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$137 and falling to the lows of US$89.89. 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 Axcelis Technologies' current trading price of US$92.09 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Axcelis Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Axcelis Technologies

Is Axcelis Technologies Still Cheap?

Good news, investors! Axcelis Technologies is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Axcelis Technologies’s ratio of 12.54x is below its peer average of 30.96x, which indicates the stock is trading at a lower price compared to the Semiconductor industry. Although, there may be another chance to buy again in the future. This is because Axcelis Technologies’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Axcelis Technologies generate?

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. However, with a negative profit growth of -9.3% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Axcelis Technologies. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ACLS is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to ACLS, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on ACLS for a while, but hesitant on making the leap, we recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So while earnings quality is important, it's equally important to consider the risks facing Axcelis Technologies at this point in time. For instance, we've identified 2 warning signs for Axcelis Technologies (1 is a bit concerning) you should be familiar with.

If you are no longer interested in Axcelis 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.