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Should You Think About Buying FARO Technologies, Inc. (NASDAQ:FARO) Now?

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Simply Wall St
·4 min read
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FARO Technologies, Inc. (NASDAQ:FARO), which is in the electronic 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$62.00 at one point, and dropping to the lows of US$38.00. 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 FARO Technologies's current trading price of US$38.91 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 FARO Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for FARO Technologies

What is FARO Technologies worth?

Good news, investors! FARO Technologies is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $77.69, but it is currently trading at US$38.91 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because FARO Technologies’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, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will FARO Technologies generate?

NasdaqGS:FARO Past and Future Earnings, March 20th 2020
NasdaqGS:FARO Past and Future Earnings, March 20th 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. 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 the company's future expectations. With revenues expected to grow by a double-digit 18% over the next couple of years, the outlook is positive for FARO Technologies. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since FARO is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. 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 FARO for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FARO. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, 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 FARO Technologies. You can find everything you need to know about FARO Technologies in the latest infographic research report. If you are no longer interested in FARO Technologies, 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.