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Blackbaud, Inc. (NASDAQ:BLKB), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$78.99 and falling to the lows of US$65.76. 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 Blackbaud's current trading price of US$71.12 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Blackbaud’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Blackbaud?
According to my valuation model, the stock is currently overvalued by about 26%, trading at US$71.12 compared to my intrinsic value of $56.34. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Blackbaud’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
What kind of growth will Blackbaud generate?
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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for Blackbaud. 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? BLKB’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BLKB 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 BLKB 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 positive outlook is encouraging for BLKB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Blackbaud as a business, it's important to be aware of any risks it's facing. For example, we've discovered 4 warning signs that you should run your eye over to get a better picture of Blackbaud.
If you are no longer interested in Blackbaud, 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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