Is There Now An Opportunity In Avalara, Inc. (NYSE:AVLR)?

While Avalara, Inc. (NYSE:AVLR) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$112 at one point, and dropping to the lows of US$69.98. 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 Avalara's current trading price of US$69.98 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Avalara’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Avalara

What is Avalara worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 10% below my intrinsic value, which means if you buy Avalara today, you’d be paying a fair price for it. And if you believe the company’s true value is $78.17, then there’s not much of an upside to gain from mispricing. What's more, Avalara’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Avalara 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. Though in the case of Avalara, it is expected to deliver a negative earnings growth of -9.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? AVLR seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on AVLR for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on AVLR should the price fluctuate below its true value.

If you want to dive deeper into Avalara, you'd also look into what risks it is currently facing. To help with this, we've discovered 5 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Avalara.

If you are no longer interested in Avalara, 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.