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Should You Think About Buying Unisys Corporation (NYSE:UIS) Now?

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Unisys Corporation (NYSE:UIS), which is in the it business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $13.44 at one point, and dropping to the lows of $9.38. 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 Unisys's current trading price of $9.66 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 Unisys’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 Unisys

What's the opportunity in Unisys?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Unisys’s ratio of 31.86x is trading slightly below its industry peers’ ratio of 35.03x, which means if you buy Unisys today, you’d be paying a reasonable price for it. And if you believe that Unisys should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Unisys’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

What kind of growth will Unisys generate?

NYSE:UIS Past and Future Earnings, June 9th 2019
NYSE:UIS Past and Future Earnings, June 9th 2019

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. Though in the case of Unisys, it is expected to deliver a negative earnings growth of -2.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? UIS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 UIS, take a look at whether its fundamentals have changed.

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Are you a potential investor? If you’ve been keeping tabs on UIS for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which 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 crystalize your views on UIS should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Unisys. You can find everything you need to know about Unisys in the latest infographic research report. If you are no longer interested in Unisys, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.