Electronics for Imaging Inc (NASDAQ:EFII), a tech company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $32.18 and falling to the lows of $27.06. 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 Electronics for Imaging’s current trading price of $29.61 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 Electronics for Imaging’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 Electronics for Imaging
What is Electronics for Imaging worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% above my intrinsic value, which means if you buy Electronics for Imaging today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $26.01, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Electronics for Imaging’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Electronics for Imaging generate?
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. Though in the case of Electronics for Imaging, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, Electronics for Imaging appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on Electronics for Imaging for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on Electronics for Imaging should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Electronics for Imaging. You can find everything you need to know about Electronics for Imaging in the latest infographic research report. If you are no longer interested in Electronics for Imaging, 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.