Is There Now An Opportunity In Aviat Networks, Inc. (NASDAQ:AVNW)?

By
Simply Wall St
Published
February 25, 2022
NasdaqGS:AVNW
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Aviat Networks, Inc. (NASDAQ:AVNW), 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$33.40 and falling to the lows of US$25.92. 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 Aviat Networks' current trading price of US$25.92 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 Aviat Networks’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Aviat Networks

Is Aviat Networks still cheap?

Good news, investors! Aviat Networks is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Aviat Networks’s ratio of 2.68x is below its peer average of 26.83x, which indicates the stock is trading at a lower price compared to the Communications industry. What’s more interesting is that, Aviat Networks’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Aviat Networks look like?

earnings-and-revenue-growth
NasdaqGS:AVNW Earnings and Revenue Growth February 25th 2022

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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Aviat Networks, at least in the near future.

What this means for you:

Are you a shareholder? Although AVNW is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to AVNW, 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 AVNW for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Aviat Networks, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Aviat Networks (2 are concerning) you should be familiar with.

If you are no longer interested in Aviat Networks, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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