Should You Buy Varonis Systems Inc (NASDAQ:VRNS)?
Varonis Systems Inc (NASDAQ:VRNS), a software company based in United States, received a lot of attention from a substantial price increase on the NasdaqGS in the over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Varonis Systems’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Varonis Systems
What is Varonis Systems worth?
According to my valuation model, the stock is currently overvalued by about 43%, trading at $49.5 compared to my intrinsic value of $34.51. This means that the buying opportunity has probably disappeared for now. Furthermore, Varonis Systems’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Varonis Systems?
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. With profit expected to grow by 34.73% over the next couple of years, the future seems bright for Varonis Systems. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Varonis Systems’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Varonis Systems should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. 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 tabs on Varonis Systems for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for Varonis Systems, which means it’s worth diving deeper into other factors 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 Varonis Systems. You can find everything you need to know about Varonis Systems in the latest infographic research report. If you are no longer interested in Varonis Systems, 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.
