Finisar Corporation (NASDAQ:FNSR), a communications equipment 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 $28.37 at one point, and dropping to the lows of $20.88. 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 FNSR's current trading price of $21.8 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FNSR’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Finisar

What's the opportunity in FNSR?

According to my valuation model, FNSR seems to be fairly priced at around 11% above my intrinsic value, which means if you buy FNSR today, you’d be paying a relatively fair price for it. And if you believe FNSR’s true value is $19.62, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that FNSR’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will FNSR 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 FNSR, it is expected to deliver a highly negative earnings growth in the upcoming, 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? Currently, FNSR appears to be trading around its fair value, 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 FNSR, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on FNSR 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. Furthermore, 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 crystalize your views on FNSR should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Finisar. You can find everything you need to know about FNSR in the latest infographic research report. If you are no longer interested in Finisar, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.