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Is Advanced Emissions Solutions, Inc. (NASDAQ:ADES) Potentially Undervalued?

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Advanced Emissions Solutions, Inc. (NASDAQ:ADES), which is in the chemicals business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGM. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Advanced Emissions Solutions’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Advanced Emissions Solutions

What’s the opportunity in Advanced Emissions Solutions?

Great news for investors – Advanced Emissions Solutions is still trading at a fairly cheap price. 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 Advanced Emissions Solutions’s ratio of 6.63x is below its peer average of 19.64x, which suggests the stock is undervalued compared to the Chemicals industry. What’s more interesting is that, Advanced Emissions Solutions’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 Advanced Emissions Solutions look like?

NASDAQGM:ADES Future Profit February 6th 19
NASDAQGM:ADES Future Profit February 6th 19

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. With profit expected to more than double over the next couple of years, the future seems bright for Advanced Emissions Solutions. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since ADES is currently undervalued, 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 undervaluation.

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

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Advanced Emissions Solutions. You can find everything you need to know about Advanced Emissions Solutions in the latest infographic research report. If you are no longer interested in Advanced Emissions Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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