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Air Industries Group (NYSEMKT:AIRI), a aerospace & defense company based in United States, received a lot of attention from a substantial price increase on the AMEX 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 take a look at Air Industries Group’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for Air Industries Group
Is Air Industries Group still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 2.66x is currently trading slightly below its industry peers’ ratio of 2.7x, which means if you buy Air Industries Group today, you’d be paying a relatively reasonable price for it. And if you believe Air Industries Group should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Air Industries Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of Air Industries Group 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. 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. In Air Industries Group’s case, its revenues are expected to grow by 54.53% over the next year, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? AIRI’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at AIRI? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on AIRI, 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 AIRI, which means it’s worth further examining 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 Air Industries Group. You can find everything you need to know about Air Industries Group in the latest infographic research report. If you are no longer interested in Air Industries Group, 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.