Why ACI Worldwide, Inc. (NASDAQ:ACIW) Could Be Worth Watching

While ACI Worldwide, Inc. (NASDAQ:ACIW) might not have the largest market cap around , it saw a significant share price rise of 20% in the past couple of months on the NASDAQGS. The recent share price gains has brought the company back closer to its yearly peak. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at ACI Worldwide’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for ACI Worldwide

Is ACI Worldwide Still Cheap?

Great news for investors – ACI Worldwide is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $72.73, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that ACI Worldwide’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 ACI Worldwide?

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. However, with a negative profit growth of -4.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for ACI Worldwide. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ACIW is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ACIW, 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 tabs on ACIW for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 2 warning signs for ACI Worldwide you should know about.

If you are no longer interested in ACI Worldwide, 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.