A10 Networks, Inc. (NYSE:ATEN), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$14.28 at one point, and dropping to the lows of US$12.36. 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 A10 Networks' current trading price of US$13.55 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 A10 Networks’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for A10 Networks

Is A10 Networks Still Cheap?

Great news for investors – A10 Networks is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. 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 A10 Networks’s ratio of 22.96x is below its peer average of 38.82x, which indicates the stock is trading at a lower price compared to the Software industry. However, given that A10 Networks’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of A10 Networks look like?

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. However, with a negative profit growth of -5.3% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for A10 Networks. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ATEN is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ATEN, or whether diversifying into another stock may be a better move for your total risk and return.