At $26.24, Is Exterran Corporation (NYSE:EXTN) A Buy?
Exterran Corporation (NYSE:EXTN), an energy company based in United States, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $33.1 at one point, and dropping to the lows of $25.87. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Exterran’s current trading price of $26.24 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 Exterran’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 Exterran
What’s the opportunity in Exterran?
Exterran appears to be overvalued by 20% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$26.24 on the market compared to my intrinsic value of $21.79. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Exterran’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 kind of growth will Exterran generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Exterran’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? EXTN’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe EXTN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on EXTN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for EXTN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Exterran. You can find everything you need to know about Exterran in the latest infographic research report. If you are no longer interested in Exterran, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
