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Is Now The Time To Look At Buying Transcat, Inc. (NASDAQ:TRNS)?

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Transcat, Inc. (NASDAQ:TRNS), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$95.00 and falling to the lows of US$71.67. 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 Transcat's current trading price of US$72.62 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 Transcat’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Transcat

What is Transcat worth?

According to my valuation model, Transcat seems to be fairly priced at around 6.81% above my intrinsic value, which means if you buy Transcat today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $67.99, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Transcat’s low beta implies that the stock is less volatile than the wider market.

What does the future of Transcat look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. With profit expected to grow by 46% over the next couple of years, the future seems bright for Transcat. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? TRNS’s optimistic future growth appears to have been factored into the current share price, 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 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 an eye on TRNS, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Transcat at this point in time. For example - Transcat has 2 warning signs we think you should be aware of.

If you are no longer interested in Transcat, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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