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Should You Investigate Clearfield, Inc. (NASDAQ:CLFD) At US$14.28?

Simply Wall St

Clearfield, Inc. (NASDAQ:CLFD), which is in the communications business, and is based in United States, saw significant share price movement during recent months on the NASDAQGM, rising to highs of $15.84 and falling to the lows of $13. 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 Clearfield's current trading price of $14.28 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 Clearfield’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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Check out our latest analysis for Clearfield

Is Clearfield still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.59% above my intrinsic value, which means if you buy Clearfield today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $13.4, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Clearfield’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Clearfield generate?

NasdaqGM:CLFD Past and Future Earnings, May 22nd 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 Clearfield, it is expected to deliver a negative earnings growth of -1.4%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? CLFD seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CLFD for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on CLFD should the price fluctuate below its true value.

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

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.

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. Thank you for reading.