Ituran Location and Control Ltd. (NASDAQ:ITRN), which is in the communications business, and is based in Israel, saw significant share price movement during recent months on the NASDAQGS, rising to highs of $32.98 and falling to the lows of $25.74. 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 Ituran Location and Control's current trading price of $25.74 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 Ituran Location and Control’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Ituran Location and Control?
Great news for investors – Ituran Location and Control is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $47.46, but it is currently trading at US$25.74 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Ituran Location and Control’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Ituran Location and Control?
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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Ituran Location and Control, at least in the near future.
What this means for you:
Are you a shareholder? Although ITRN is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to ITRN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on ITRN for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ituran Location and Control. You can find everything you need to know about Ituran Location and Control in the latest infographic research report. If you are no longer interested in Ituran Location and Control, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.