Westell Technologies Inc (NASDAQ:WSTL), a communications equipment company based in United States, received a lot of attention from a substantial price increase on the NasdaqCM in the over the last few months. 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 WSTL’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for Westell Technologies
What’s the opportunity in WSTL?
According to my valuation model, WSTL seems to be fairly priced at around 15% below my intrinsic value, which means if you buy WSTL today, you’d be paying a reasonable price for it. And if you believe that WSTL is really worth $4.81, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that WSTL’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of WSTL 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 WSTL future expectations. In the upcoming year, WSTL’s earnings are expected to increase by 25.08%, indicating a highly optimistic future ahead. This should lead to more robust 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 WSTL’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 track record of its management team. Have these factors changed since the last time you looked at WSTL? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on WSTL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for WSTL, 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 Westell Technologies. You can find everything you need to know about WSTL in the latest infographic research report. If you are no longer interested in Westell 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.