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Is WANdisco plc (LON:WAND) Potentially Undervalued?

Simply Wall St

WANdisco plc (LON:WAND), which is in the software business, and is based in United Kingdom, received a lot of attention from a substantial price increase on the AIM over the last few months. 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. But what if there is still an opportunity to buy? Let’s take a look at WANdisco’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for WANdisco

What is WANdisco worth?

According to my valuation model, WANdisco seems to be fairly priced at around 2.86% above my intrinsic value, which means if you buy WANdisco today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £4.12, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since WANdisco’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 WANdisco generate?

AIM:WAND Past and Future Earnings, December 10th 2019

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 grow by 44% over the next year, the near-term future seems bright for WANdisco. 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 already priced in WAND’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 tabs on WAND, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into 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 WANdisco. You can find everything you need to know about WANdisco in the latest infographic research report. If you are no longer interested in WANdisco, 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.