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What Does Ambarella, Inc.'s (NASDAQ:AMBA) Share Price Indicate?
Ambarella, Inc. (NASDAQ:AMBA), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stockās share price. But what if there is still an opportunity to buy? Letās examine Ambarellaās valuation and outlook in more detail to determine if thereās still a bargain opportunity.
Check out our latest analysis for Ambarella
What's the opportunity in Ambarella?
The stock seems fairly valued at the moment according to my valuation model. Itās trading around 15.78% above my intrinsic value, which means if you buy Ambarella today, youād be paying a relatively fair price for it. And if you believe that the stock is really worth $173.04, thereās only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Ambarellaās share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Ambarella?
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 letās also take a look at the company's future expectations. In the upcoming year, Ambarella's earnings are expected to increase by 46%, 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 AMBAās positive outlook, with shares trading around its fair value. However, there are also other important factors which we havenāt 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 youāve been keeping tabs on AMBA, 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 itās worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 2 warning signs for Ambarella and you'll want to know about these.
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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.
About NasdaqGS:AMBA
Ambarella
Develops semiconductor solutions that enable high-definition (HD) and ultra HD compression, image signal processing, and artificial intelligence processing worldwide.
Excellent balance sheet and fair value.