Should You Buy NXP Semiconductors NV (NXPI)?
Let's talk about the popular NXP Semiconductors NV (NASDAQ:NXPI). The company's shares had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of $109.11 to $113.09. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at NXPI’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 NXPI
What is NXPI worth?
According to my valuation model, the stock is currently overvalued by about 93%, trading at $112.72 compared to my intrinsic value of $58.39. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like NXPI’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because NXPI’s stock is less volatile than the wider market given its low beta.
Can we expect growth from NXPI?
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 NXPI, it is expected to deliver a highly negative earnings growth in the next few years, 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? If you believe NXPI is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on NXPI for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on NXP Semiconductors N.V. You can find everything you need to know about NXPI in the latest infographic research report. If you are no longer interested in NXP Semiconductors N.V, 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.
