Why ZipRecruiter, Inc. (NYSE:ZIP) Could Be Worth Watching
While ZipRecruiter, Inc. (NYSE:ZIP) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$15.29 at one point, and dropping to the lows of US$12.46. 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 ZipRecruiter's current trading price of US$12.46 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ZipRecruiter’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for ZipRecruiter
Is ZipRecruiter Still Cheap?
ZipRecruiter appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that ZipRecruiter’s ratio of 25.08x is above its peer average of 18.24x, which suggests the stock is trading at a higher price compared to the Interactive Media and Services industry. But, is there another opportunity to buy low in the future? Since ZipRecruiter’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.
Can we expect growth from ZipRecruiter?
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. 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 ZipRecruiter, at least in the near future.
What This Means For You
Are you a shareholder? If you believe ZIP is currently trading above its peers, selling high and buying it back up again when its price falls towards the industry PE ratio 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 an eye on ZIP for a while, now may not be the best time to enter into the stock. Its price has risen beyond its industry peers, 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?
If you want to dive deeper into ZipRecruiter, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with ZipRecruiter, and understanding these should be part of your investment process.
If you are no longer interested in ZipRecruiter, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
