Should You Think About Buying AudioCodes Ltd. (NASDAQ:AUDC) Now?

While AudioCodes Ltd. (NASDAQ:AUDC) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$12.52 and falling to the lows of US$8.15. 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 AudioCodes' current trading price of US$8.15 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 AudioCodes’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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What Is AudioCodes Worth?

Good news, investors! AudioCodes is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that AudioCodes’s ratio of 15.69x is below its peer average of 21.82x, which indicates the stock is trading at a lower price compared to the Communications industry. AudioCodes’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 industry peers, 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.

See our latest analysis for AudioCodes

Can we expect growth from AudioCodes?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 relatively muted revenue growth of 7.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for AudioCodes, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since AUDC is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on AUDC for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AUDC. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To that end, you should learn about the 2 warning signs we've spotted with AudioCodes (including 1 which is a bit concerning).

If you are no longer interested in AudioCodes, 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.