Dialog Semiconductor Plc (XTRA:DLG), a semiconductor company based in United Kingdom, saw significant share price volatility over the past couple of months on the XTRA, rising to the highs of €26.6 and falling to the lows of €18.31. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Dialog Semiconductor’s current trading price of €19.57 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 Dialog Semiconductor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Dialog Semiconductor
Is Dialog Semiconductor still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.24% below my intrinsic value, which means if you buy Dialog Semiconductor today, you’d be paying a fair price for it. And if you believe that the stock is really worth €22.56, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like Dialog Semiconductor’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Dialog Semiconductor 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. However, with a relatively muted profit growth of 0.24% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Dialog Semiconductor, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in DLG’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on DLG, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Dialog Semiconductor. You can find everything you need to know about Dialog Semiconductor in the latest infographic research report. If you are no longer interested in Dialog Semiconductor, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.