At US$2.76, Is Smith Micro Software, Inc. (NASDAQ:SMSI) Worth Looking At Closely?

While Smith Micro Software, Inc. (NASDAQ:SMSI) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the NASDAQCM over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Smith Micro Software’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Smith Micro Software

Is Smith Micro Software still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.0% below my intrinsic value, which means if you buy Smith Micro Software today, you’d be paying a fair price for it. And if you believe the company’s true value is $2.82, then there’s not much of an upside to gain from mispricing. In addition to this, Smith Micro Software has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Smith Micro Software look like?

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. In the upcoming year, Smith Micro Software's earnings are expected to increase by 42%, 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? SMSI’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on SMSI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

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 3 warning signs for Smith Micro Software you should know about.

If you are no longer interested in Smith Micro Software, 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.