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Is It Time To Consider Buying Coupa Software Incorporated (NASDAQ:COUP)?

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·3 min read
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  • COUP

Let's talk about the popular Coupa Software Incorporated (NASDAQ:COUP). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$370 at one point, and dropping to the lows of US$224. 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 Coupa Software's current trading price of US$224 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 Coupa Software’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 Coupa Software

What is Coupa Software worth?

According to my valuation model, the stock is currently overvalued by about 36%, trading at US$224 compared to my intrinsic value of $164.58. This means that the opportunity to buy Coupa Software at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Coupa Software’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 Coupa Software look like?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Coupa Software, at least in the near future.

What this means for you:

Are you a shareholder? If you believe COUP 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. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 COUP for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?

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. For example, Coupa Software has 4 warning signs (and 1 which is concerning) we think you should know about.

If you are no longer interested in Coupa Software, 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 (at) simplywallst.com.