Xerium Technologies Inc (NYSE:XRM), a machinery company based in United States, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $6.08 at one point, and dropping to the lows of $3.76. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether XRM’s current trading price of $3.76 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 XRM’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 XRM
Is XRM still cheap?
According to my valuation model, XRM seems to be fairly priced at around 20% below my intrinsic value, which means if you buy XRM today, you’d be paying a reasonable price for it. And if you believe that XRM is really worth $4.67, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because XRM’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, XRM’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of XRM 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 XRM future expectations. Though in the case of XRM, it is expected to deliver a relatively unexciting top-line growth of 0.55% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for XRM, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in XRM’s future 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 XRM? 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 tabs on XRM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 Xerium Technologies. You can find everything you need to know about XRM in the latest infographic research report. If you are no longer interested in Xerium 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.