Is It Too Late To Consider Buying Iteris, Inc. (NASDAQ:ITI)?

Iteris, Inc. (NASDAQ:ITI), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQCM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Iteris’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Iteris

What's the opportunity in Iteris?

According to my valuation model, Iteris seems to be fairly priced at around 11% below my intrinsic value, which means if you buy Iteris today, you’d be paying a fair price for it. And if you believe that the stock is really worth $5.20, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Iteris’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Iteris generate?

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 Iteris’s case, its revenues over the next few years are expected to grow by 30%, 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? It seems like the market has already priced in ITI’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ITI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

Diving deeper into the forecasts for Iteris mentioned earlier will help you understand how analysts view the stock going forward. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Iteris, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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