Insteel Industries Inc (NASDAQ:IIIN), a building products company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $33.78 at one point, and dropping to the lows of $24. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether IIIN's current trading price of $25.69 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at IIIN’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Insteel Industries

Is IIIN still cheap?

According to my valuation model, IIIN seems to be fairly priced at around 1% above my intrinsic value, which means if you buy IIIN today, you’d be paying a relatively fair price for it. And if you believe IIIN’s true value is $25.4, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because IIIN’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, IIIN’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will IIIN 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. IIIN’s earnings over the next few years are expected to increase by 54.59%, indicating a highly optimistic future ahead. This should lead to more robust 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 IIIN’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 IIIN? 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 IIIN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for IIIN, 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.