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Is Echo Global Logistics, Inc. (NASDAQ:ECHO) Potentially Undervalued?

Simply Wall St

Echo Global Logistics, Inc. (NASDAQ:ECHO), which is in the logistics business, and is based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$23.28 at one point, and dropping to the lows of US$15.54. 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 Echo Global Logistics's current trading price of US$15.54 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 Echo Global Logistics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Echo Global Logistics

What is Echo Global Logistics worth?

Good news, investors! Echo Global Logistics is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $23.95, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Echo Global Logistics’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Echo Global Logistics generate?

NasdaqGS:ECHO Past and Future Earnings, March 12th 2020

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Echo Global Logistics, it is expected to deliver a relatively unexciting earnings growth of 0.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since ECHO is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ECHO for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ECHO. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Echo Global Logistics. You can find everything you need to know about Echo Global Logistics in the latest infographic research report. If you are no longer interested in Echo Global Logistics, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.