Should You Buy Intrinsyc Technologies Corporation (TSE:ITC) Now?
Intrinsyc Technologies Corporation (TSX:ITC), a software company based in Canada, led the TSX gainers with a relatively large price hike in the past couple of weeks. 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? Today I will analyse the most recent data on Intrinsyc Technologies’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Intrinsyc Technologies
What’s the opportunity in Intrinsyc Technologies?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Intrinsyc Technologies’s ratio of 35.68x is trading slightly below its industry peers’ ratio of 36.13x, which means if you buy Intrinsyc Technologies today, you’d be paying a reasonable price for it. And if you believe Intrinsyc Technologies should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Intrinsyc Technologies’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Intrinsyc Technologies?
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 Intrinsyc Technologies’s case, its revenues over the next few years are expected to grow by 30.25%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in ITC’s positive outlook, with shares trading around its fair value. 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 ITC? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on ITC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for ITC, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Intrinsyc Technologies. You can find everything you need to know about Intrinsyc Technologies in the latest infographic research report. If you are no longer interested in Intrinsyc Technologies, 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.
