Comtech Telecommunications Corp (NASDAQ:CMTL), a technology hardware and equipment company based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine CMTL’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What’s the opportunity in CMTL?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy CMTL today, you’d be paying a fair price for it. And if you believe that CMTL is really worth $22.87, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that CMTL’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will CMTL generate?
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 CMTL, it is expected to deliver a relatively unexciting earnings growth of 1.85%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for CMTL, at least in the near term.
What this means for you:
Are you a shareholder? CMTL’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 CMTL? 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 tabs on CMTL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for CMTL, which means it’s worth diving deeper into 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 Comtech Telecommunications. You can find everything you need to know about CMTL in the latest infographic research report. If you are no longer interested in Comtech Telecommunications, you can use our free platform to see my list of over 50 other stocks with a high growth potential.