Is It Time To Consider Buying Calix, Inc. (NYSE:CALX)?

By
Simply Wall St
Published
January 14, 2022
NYSE:CALX
Source: Shutterstock

Calix, Inc. (NYSE:CALX), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$79.97 and falling to the lows of US$53.50. 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 Calix's current trading price of US$54.68 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 Calix’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Calix

Is Calix still cheap?

Great news for investors – Calix is still trading at a fairly cheap price according to my price multiple model, where I compare 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 Calix’s ratio of 14.37x is below its peer average of 26.17x, which indicates the stock is trading at a lower price compared to the Communications industry. What’s more interesting is that, Calix’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.

Can we expect growth from Calix?

earnings-and-revenue-growth
NYSE:CALX Earnings and Revenue Growth January 14th 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. Calix's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since CALX is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on CALX for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CALX. 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 investment decision.

If you want to dive deeper into Calix, you'd also look into what risks it is currently facing. For example, Calix has 4 warning signs (and 1 which is significant) we think you should know about.

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

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