Is There Now An Opportunity In Limelight Networks Inc (LLNW)?
Limelight Networks Inc (NASDAQ:LLNW), a software and services company based in United States, led the NasdaqGS gainers with a relatively large price hike in the past couple of weeks. 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 LLNW’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Limelight Networks
Is LLNW still cheap?
LLNW appears to be overvalued by 49% at the moment, based on my discounted cash flow valuation. Not the best news for investors looking to buy! The intrinsic value of the stock is $2.45, but it is currently valued by the market at $3.66. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that LLNW’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 does the future of LLNW look like?
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 LLNW future expectations. With revenues expected to grow by a double-digit 25.65% over the next couple of years, the outlook is positive for LLNW. If the level of expenses is able to be maintained, 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? It seems like the market has well and truly priced in LLNW’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe LLNW 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 LLNW 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 optimistic prospect is encouraging for LLNW, 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 Limelight Networks. You can find everything you need to know about LLNW in the latest infographic research report. If you are no longer interested in Limelight Networks, 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.
