Should You Think About Buying Everspin Technologies, Inc. (NASDAQ:MRAM) Now?

By
Simply Wall St
Published
November 18, 2021
NasdaqGM:MRAM
Source: Shutterstock

Everspin Technologies, Inc. (NASDAQ:MRAM), might not be a large cap stock, but it led the NASDAQGM gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present 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 Everspin Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Everspin Technologies

What's the opportunity in Everspin Technologies?

Great news for investors – Everspin Technologies is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $17.31, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Everspin Technologies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Everspin Technologies?

earnings-and-revenue-growth
NasdaqGM:MRAM Earnings and Revenue Growth November 19th 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. 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 revenues expected to grow by a double-digit 24% in the upcoming year, the outlook is positive for Everspin Technologies. If the level of expenses is able to be maintained, 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? Since MRAM is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MRAM for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MRAM. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 2 warning signs with Everspin Technologies, and understanding these should be part of your investment process.

If you are no longer interested in Everspin 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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