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Is Astec Industries, Inc. (NASDAQ:ASTE) Potentially Undervalued?

Simply Wall St

Astec Industries, Inc. (NASDAQ:ASTE), which is in the machinery business, and is based in United States, received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Astec Industries’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Astec Industries

What's the opportunity in Astec Industries?

Good news, investors! Astec Industries is still a bargain right now. According to my valuation, the intrinsic value for the stock is $72.42, but it is currently trading at US$42.00 on the share market, meaning that there is still an opportunity to buy now. However, given that Astec Industries’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Astec Industries look like?

NasdaqGS:ASTE Past and Future Earnings, January 1st 2020

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 Astec Industries, it is expected to deliver a negative revenue growth of -2.8% over the next couple of 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? Although ASTE is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ASTE, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on ASTE for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.