U.S. Markets closed

What Is Webjet Limited's (ASX:WEB) Share Price Doing?

Simply Wall St

Webjet Limited (ASX:WEB), which is in the online retail business, and is based in Australia, saw a significant share price rise of over 20% in the past couple of months on the ASX. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Webjet’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Webjet

What is Webjet worth?

Webjet appears to be overvalued by 31% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$13.69 on the market compared to my intrinsic value of A$10.49. This means that the buying opportunity has probably disappeared for now. Furthermore, Webjet’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of Webjet look like?

ASX:WEB Past and Future Earnings, January 23rd 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. With profit expected to grow by 92% over the next couple of years, the future seems bright for Webjet. 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 WEB’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 WEB 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 WEB 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 WEB, which means it’s worth diving deeper into other factors 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 Webjet. You can find everything you need to know about Webjet in the latest infographic research report. If you are no longer interested in Webjet, 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.