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Today we're going to take a look at the well-established SolarEdge Technologies, Inc. (NASDAQ:SEDG). The company's stock saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$366 and falling to the lows of US$247. 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 SolarEdge Technologies' current trading price of US$266 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at SolarEdge Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is SolarEdge Technologies still cheap?
SolarEdge Technologies appears to be overvalued by 37% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$266 on the market compared to my intrinsic value of $194.63. This means that the opportunity to buy SolarEdge Technologies at a good price has disappeared! In addition to this, it seems like SolarEdge Technologies’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from SolarEdge Technologies?
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. With profit expected to more than double over the next couple of years, the future seems bright for SolarEdge Technologies. 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 well and truly priced in SEDG’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 SEDG 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 tabs on SEDG for some time, 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 positive outlook is encouraging for SEDG, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 4 warning signs for SolarEdge Technologies you should know about.
If you are no longer interested in SolarEdge Technologies, 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.
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