At US$9.90, Is It Time To Put Unifi, Inc. (NYSE:UFI) On Your Watch List?
Unifi, Inc. (NYSE:UFI), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. 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? Let’s examine Unifi’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Unifi
What Is Unifi Worth?
According to my valuation model, Unifi seems to be fairly priced at around 6.28% above my intrinsic value, which means if you buy Unifi today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $9.32, there’s only an insignificant downside when the price falls to its real value. What's more, Unifi’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Unifi?
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 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 Unifi, at least in the near future.
What This Means For You
Are you a shareholder? UFI seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on UFI for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on UFI should the price fluctuate below its true value.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Unifi has 1 warning sign we think you should be aware of.
If you are no longer interested in Unifi, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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