HMS Holdings Corp (NASDAQ:HMSY), a healthcare equipment and services company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $20.15 and falling to the lows of $17.36. 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 HMSY's current trading price of $19.02 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 HMSY’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 HMS Holdings

Is HMSY still cheap?

My valuation model shows that the stock’s value should be $14.19 but it is currently trading at $19.02 on the share market, meaning that the opportunity to buy HMSY at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that HMSY’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will HMSY generate?

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 HMSY future expectations. With profit expected to more than double over the next couple of years, the future seems bright for HMSY. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in HMSY’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe HMSY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HMSY for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for HMSY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.