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Unisys Corporation (NYSE:UIS), which is in the it business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $13.44 at one point, and dropping to the lows of $9.38. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Unisys's current trading price of $9.66 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 Unisys’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 Unisys
What's the opportunity in Unisys?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Unisys’s ratio of 31.86x is trading slightly below its industry peers’ ratio of 35.03x, which means if you buy Unisys today, you’d be paying a reasonable price for it. And if you believe that Unisys should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Unisys’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 kind of growth will Unisys 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 Unisys, it is expected to deliver a negative earnings growth of -2.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? UIS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 UIS, take a look at whether its fundamentals have changed.