At US$3.75, Is It Time To Put RF Industries, Ltd. (NASDAQ:RFIL) On Your Watch List?

While RF Industries, Ltd. (NASDAQ:RFIL) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NASDAQGM over the last few months, increasing to US$4.30 at one point, and dropping to the lows of US$3.56. 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 RF Industries' current trading price of US$3.75 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 RF Industries’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 RF Industries

Is RF Industries Still Cheap?

According to our valuation model, RF Industries seems to be fairly priced at around 7.7% below our intrinsic value, which means if you buy RF Industries today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $4.06, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, RF Industries’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of RF Industries look like?

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. In the upcoming year, RF Industries' earnings are expected to increase by 65%, 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? RFIL’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 track record of its management team. 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 tabs on RFIL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

So while earnings quality is important, it's equally important to consider the risks facing RF Industries at this point in time. While conducting our analysis, we found that RF Industries has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in RF Industries, 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.