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What Is New Relic, Inc.'s (NYSE:NEWR) Share Price Doing?

Simply Wall St

New Relic, Inc. (NYSE:NEWR), which is in the software business, and is based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. As a mid-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, could the stock still be trading at a relatively cheap price? Let’s examine New Relic’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for New Relic

Is New Relic still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.08% above my intrinsic value, which means if you buy New Relic today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $66.97, there’s only an insignificant downside when the price falls to its real value. Furthermore, New Relic’s low beta implies that the stock is less volatile than the wider market.

What does the future of New Relic look like?

NYSE:NEWR Past and Future Earnings, January 6th 2020

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. However, with a relatively muted profit growth of 8.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for New Relic, at least in the short term.

What this means for you:

Are you a shareholder? NEWR’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 an eye on NEWR, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 New Relic. You can find everything you need to know about New Relic in the latest infographic research report. If you are no longer interested in New Relic, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.