TESSCO Technologies Incorporated (NASDAQ:TESS), which is in the communications business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on TESSCO Technologies’s outlook and valuation to see if the opportunity still exists.
What is TESSCO Technologies worth?
Good news, investors! TESSCO Technologies is still a bargain right now. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 25.76x is currently well-below the industry average of 33.6x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because TESSCO 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 does the future of TESSCO Technologies 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. 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. However, with a relatively muted profit growth of 6.1% expected over the next year, growth doesn’t seem like a key driver for a buy decision for TESSCO Technologies, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since TESS 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 TESS for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TESS. 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 TESSCO Technologies. You can find everything you need to know about TESSCO Technologies in the latest infographic research report. If you are no longer interested in TESSCO Technologies, 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 email@example.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.