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Is Nordic Semiconductor ASA (OB:NOD) Potentially Undervalued?

Simply Wall St

Nordic Semiconductor ASA (OB:NOD), which is in the semiconductor business, and is based in Norway, saw a significant share price rise of over 20% in the past couple of months on the OB. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Nordic Semiconductor’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Nordic Semiconductor

What's the opportunity in Nordic Semiconductor?

Good news, investors! Nordic Semiconductor is still a bargain right now. My valuation model shows that the intrinsic value for the stock is NOK76.61, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Nordic Semiconductor’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.

What kind of growth will Nordic Semiconductor generate?

OB:NOD Past and Future Earnings, October 16th 2019

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. Nordic Semiconductor’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since NOD is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on NOD for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy NOD. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Nordic Semiconductor. You can find everything you need to know about Nordic Semiconductor in the latest infographic research report. If you are no longer interested in Nordic Semiconductor, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.