While A10 Networks, Inc. (NYSE:ATEN) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NYSE over the last few months. The company is inching closer to its yearly highs following the recent share price climb. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, could the stock still be trading at a relatively cheap price? Let's examine A10 Networks's valuation and outlook in more detail to determine if there's still a bargain opportunity.
What Is A10 Networks Worth?
Good news, investors! A10 Networks is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. We'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 26.2x is currently well-below the industry average of 40.57x, meaning that it is trading at a cheaper price relative to its peers. What's more interesting is that, A10 Networks's share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of A10 Networks look like?
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 A10 Networks, it is expected to deliver a relatively unexciting earnings growth of 3.1%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for A10 Networks, at least in the near term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since ATEN is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on ATEN for a while, now might be the time to enter the stock. Its future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy ATEN. 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 investment decision.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for A10 Networks you should be aware of.
If you are no longer interested in A10 Networks, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
