What Does Seagate Technology Holdings plc's (NASDAQ:STX) Share Price Indicate?
Today we're going to take a look at the well-established Seagate Technology Holdings plc (NASDAQ:STX). The company's stock saw a significant share price rise of 21% in the past couple of months on the NASDAQGS. The company is inching closer to its yearly highs following the recent share price climb. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Seagate Technology Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Seagate Technology Holdings
What Is Seagate Technology Holdings Worth?
According to our valuation model, the stock is currently overvalued by about 27%, trading at US$87.52 compared to our intrinsic value of $68.66. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Seagate Technology Holdings’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Seagate Technology Holdings?
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 revenues expected to grow by 45% over the next couple of years, the future seems bright for Seagate Technology Holdings. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in STX’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe STX 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 an eye on STX for a while, 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 positive outlook is encouraging for STX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Seagate Technology Holdings, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 3 warning signs for Seagate Technology Holdings and you'll want to know about these.
If you are no longer interested in Seagate Technology Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
