Is MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Potentially Undervalued?

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MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI), which is in the semiconductor business, and is based in United States, led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine MACOM Technology Solutions Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for MACOM Technology Solutions Holdings

What is MACOM Technology Solutions Holdings worth?

MACOM Technology Solutions Holdings appears to be overvalued by 49.24% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$15.14 on the market compared to my intrinsic value of $10.14. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since MACOM Technology Solutions Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.

What kind of growth will MACOM Technology Solutions Holdings generate?

NasdaqGS:MTSI Past and Future Earnings, June 10th 2019
NasdaqGS:MTSI Past and Future Earnings, June 10th 2019

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 profit expected to grow by 43% over the next year, the near-term future seems bright for MACOM Technology Solutions Holdings. 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? MTSI’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MTSI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on MTSI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for MTSI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MACOM Technology Solutions Holdings. You can find everything you need to know about MACOM Technology Solutions Holdings in the latest infographic research report. If you are no longer interested in MACOM Technology Solutions Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.