Is It Too Late To Consider Buying Agilysys, Inc. (NASDAQ:AGYS)?

Agilysys, Inc. (NASDAQ:AGYS), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. The company’s trading levels have reached its high for the past year, following the recent bounce in the share price. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Agilysys’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Agilysys

What’s The Opportunity In Agilysys?

According to our price multiple model, which makes a comparison between the company’s price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Agilysys’s ratio of 32.73x is trading slightly below its industry peers’ ratio of 40.88x, which means if you buy Agilysys today, you’d be paying a reasonable price for it. And if you believe that Agilysys should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Agilysys’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will Agilysys generate?

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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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Agilysys, at least in the near future.

What This Means For You

Are you a shareholder? Currently, AGYS appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on AGYS, take a look at whether its fundamentals have changed.

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Are you a potential investor? If you’ve been keeping an eye on AGYS for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on AGYS should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Agilysys, you’d also look into what risks it is currently facing. To help with this, we’ve discovered 4 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Agilysys.

If you are no longer interested in Agilysys, 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.

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

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