Calavo Growers, Inc. (NASDAQ:CVGW), 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$63.60 and falling to the lows of US$34.86. 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 Calavo Growers' current trading price of US$37.16 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 Calavo Growers’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 Calavo Growers

What's the opportunity in Calavo Growers?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.23% above my intrinsic value, which means if you buy Calavo Growers today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $32.82, there’s only an insignificant downside when the price falls to its real value. What's more, Calavo Growers’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Calavo Growers generate?

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. Calavo Growers' 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 CVGW’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 an eye on CVGW, now may not be the most optimal 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 Calavo Growers at this point in time. While conducting our analysis, we found that Calavo Growers has 3 warning signs and it would be unwise to ignore them.

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

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 (at) simplywallst.com.