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Is There Now An Opportunity In SecureWorks Corp. (NASDAQ:SCWX)?

Simply Wall St

While SecureWorks Corp. (NASDAQ:SCWX) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on SecureWorks’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for SecureWorks

What's the opportunity in SecureWorks?

Great news for investors – SecureWorks is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $17.26, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, SecureWorks’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from SecureWorks?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. However, with a negative profit growth of -5.8% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for SecureWorks. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although SCWX is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to SCWX, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on SCWX for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into SecureWorks, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for SecureWorks you should know about.

If you are no longer interested in SecureWorks, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.