Barracuda Networks Inc (NYSE:CUDA), a software company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Barracuda Networks’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Barracuda Networks
What’s the opportunity in Barracuda Networks?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% above my intrinsic value, which means if you buy Barracuda Networks today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $24.16, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Barracuda 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Barracuda Networks?
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. 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. Barracuda Networks’s earnings over the next few years are expected to increase by 95.99%, indicating a highly optimistic future ahead. This should lead to more robust 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 Barracuda Networks’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 track record of its management team. 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 tabs on Barracuda Networks, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Barracuda Networks. You can find everything you need to know about Barracuda Networks in the latest infographic research report. If you are no longer interested in Barracuda Networks, 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.