Should You Think About Buying Agilysys, Inc. (NASDAQ:AGYS) Now?

Agilysys, Inc. (NASDAQ:AGYS), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$77.56 and falling to the lows of US$63.77. 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 Agilysys' current trading price of US$68.35 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Agilysys’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Agilysys

What's The Opportunity In Agilysys?

Agilysys appears to be overvalued by 28% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$68.35 on the market compared to my intrinsic value of $53.56. This means that the opportunity to buy Agilysys at a good price has disappeared! Furthermore, Agilysys’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will Agilysys generate?

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 let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 19% in the upcoming year, the short-term outlook is positive for Agilysys. 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? AGYS’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe AGYS 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 AGYS 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 AGYS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Agilysys at this point in time. In terms of investment risks, we've identified 1 warning sign with Agilysys, and understanding this should be part of your investment process.

If you are no longer interested in Agilysys, 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.