Cloudera, Inc. (NYSE:CLDR), which is in the software business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $15.15 at one point, and dropping to the lows of $10. 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 Cloudera's current trading price of $10 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 Cloudera’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
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What is Cloudera worth?
Great news for investors – Cloudera is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $15.67, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Cloudera’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Cloudera look like?
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. 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 a negative profit growth of -6.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Cloudera. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although CLDR is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CLDR, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on CLDR for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Cloudera. You can find everything you need to know about Cloudera in the latest infographic research report. If you are no longer interested in Cloudera, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.