Should You Investigate Ambarella, Inc. (NASDAQ:AMBA) At US$45.59?

Ambarella, Inc. (NASDAQ:AMBA), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$58.19 and falling to the lows of US$45.59. 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 Ambarella's current trading price of US$45.59 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 Ambarella’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 Ambarella

What Is Ambarella Worth?

Great news for investors – Ambarella is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $72.47, but it is currently trading at US$45.59 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Ambarella’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Ambarella?

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. 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. Ambarella's earnings over the next few years are expected to increase by 49%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since AMBA is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on AMBA for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AMBA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Ambarella, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Ambarella you should be aware of.

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

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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.