What Is Aviat Networks, Inc.'s (NASDAQ:AVNW) Share Price Doing?
Aviat Networks, Inc. (NASDAQ:AVNW), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$39.31 and falling to the lows of US$30.57. 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 Aviat Networks' current trading price of US$32.44 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 Aviat Networks’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 Aviat Networks
What's The Opportunity In Aviat Networks?
The share price seems sensible at the moment 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 Aviat Networks’s ratio of 26.67x is trading slightly above its industry peers’ ratio of 24.85x, which means if you buy Aviat Networks today, you’d be paying a relatively reasonable price for it. And if you believe Aviat Networks should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Aviat Networks’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Aviat Networks look like?
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. In Aviat Networks' case, its earnings over the next year are expected to double, indicating an incredibly optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? AVNW’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at AVNW? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping tabs on AVNW, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for AVNW, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Aviat Networks as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Aviat Networks you should be aware of.
If you are no longer interested in Aviat Networks, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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