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Cornerstone OnDemand, Inc. (NASDAQ:CSOD), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the mid-cap 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 Cornerstone OnDemand’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Cornerstone OnDemand worth?
According to my valuation model, Cornerstone OnDemand seems to be fairly priced at around 7.2% below my intrinsic value, which means if you buy Cornerstone OnDemand today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $41.17, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Cornerstone OnDemand’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 Cornerstone OnDemand?
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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Cornerstone OnDemand, at least in the near future.
What this means for you:
Are you a shareholder? Currently, CSOD appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CSOD for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on CSOD should the price fluctuate below its true value.
If you'd like to know more about Cornerstone OnDemand as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Cornerstone OnDemand you should know about.
If you are no longer interested in Cornerstone OnDemand, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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