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While Arcosa, Inc. (NYSE:ACA) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$109 at one point, and dropping to the lows of US$78.55. 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 Arcosa's current trading price of US$79.66 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 Arcosa’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Arcosa Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 9.26% above our intrinsic value, which means if you buy Arcosa today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $72.91, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Arcosa’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Check out our latest analysis for Arcosa
Can we expect growth from Arcosa?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 the company's future expectations. Arcosa's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 ACA’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? 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 ACA, 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 the company, 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.