U.S. markets close in 2 hours 52 minutes
  • S&P 500

    4,200.41
    +77.94 (+1.89%)
     
  • Dow 30

    33,259.35
    +484.94 (+1.48%)
     
  • Nasdaq

    12,801.25
    +307.32 (+2.46%)
     
  • Russell 2000

    1,960.71
    +47.82 (+2.50%)
     
  • Crude Oil

    91.61
    +1.11 (+1.23%)
     
  • Gold

    1,814.50
    +2.20 (+0.12%)
     
  • Silver

    20.75
    +0.26 (+1.28%)
     
  • EUR/USD

    1.0327
    +0.0110 (+1.07%)
     
  • 10-Yr Bond

    2.7700
    -0.0270 (-0.97%)
     
  • GBP/USD

    1.2248
    +0.0172 (+1.42%)
     
  • USD/JPY

    132.3830
    -2.7330 (-2.02%)
     
  • BTC-USD

    23,936.76
    +839.10 (+3.63%)
     
  • CMC Crypto 200

    563.39
    +32.17 (+6.06%)
     
  • FTSE 100

    7,507.11
    +18.96 (+0.25%)
     
  • Nikkei 225

    27,819.33
    -180.63 (-0.65%)
     

What Does National Instruments Corporation's (NASDAQ:NATI) Share Price Indicate?

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

National Instruments Corporation (NASDAQ:NATI), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$41.51 at one point, and dropping to the lows of US$31.02. 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 National Instruments' current trading price of US$31.02 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at National Instruments’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 National Instruments

What's the opportunity in National Instruments?

National Instruments is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 36.97x is currently well-above the industry average of 16.39x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since National Instruments’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 kind of growth will National Instruments generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

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 the upcoming year, National Instruments' earnings are expected to increase by 48%, 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? NATI’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe NATI should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on NATI for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for NATI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 3 warning signs for National Instruments (1 is concerning!) that we believe deserve your full attention.

If you are no longer interested in National Instruments, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.