ADVA Optical Networking SE (ETR:ADV), a communications company based in Germany, received a lot of attention from a substantial price increase on the XTRA over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on ADVA Optical Networking’s outlook and valuation to see if the opportunity still exists. See our latest analysis for ADVA Optical Networking

What’s the opportunity in ADVA Optical Networking?

According to my valuation model, ADVA Optical Networking seems to be fairly priced at around 3.08% below my intrinsic value, which means if you buy ADVA Optical Networking today, you’d be paying a fair price for it. And if you believe the company’s true value is €6.29, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like ADVA Optical Networking’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will ADVA Optical Networking 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. With revenues expected to grow by a double-digit 13.49% over the next couple of years, the outlook is positive for ADVA Optical Networking. If the level of expenses is able to be maintained, 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 already priced in ADV’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ADV, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on ADVA Optical Networking. You can find everything you need to know about ADVA Optical Networking in the latest infographic research report. If you are no longer interested in ADVA Optical Networking, 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.