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Is Now An Opportune Moment To Examine dotdigital Group Plc (LON:DOTD)?

Micheal Lombardo

dotdigital Group Plc (LON:DOTD), which is in the software business, and is based in United Kingdom, received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to £0.88 at one point, and dropping to the lows of £0.76. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether dotdigital Group’s current trading price of £0.79 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at dotdigital Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for dotdigital Group

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Is dotdigital Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15.27% above my intrinsic value, which means if you buy dotdigital Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is £0.69, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, dotdigital Group has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of dotdigital Group look like?

AIM:DOTD Future Profit January 29th 19

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 56% over the next couple of years, the future seems bright for dotdigital Group. 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 already priced in DOTD’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on DOTD, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 dotdigital Group. You can find everything you need to know about dotdigital Group in the latest infographic research report. If you are no longer interested in dotdigital Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.