SEEK Limited (ASX:SEK), which is in the professional services business, and is based in Australia, received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to A$18.77 at one point, and dropping to the lows of A$16.62. 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 SEEK's current trading price of A$17.84 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 SEEK’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is SEEK worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.56% above my intrinsic value, which means if you buy SEEK today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth A$16.74, there’s only an insignificant downside when the price falls to its real value. Furthermore, SEEK’s low beta implies that the stock is less volatile than the wider market.
What does the future of SEEK 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. 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 over the next couple of years, the future seems bright for SEEK. 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 SEK’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 SEK, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 SEEK. You can find everything you need to know about SEEK in the latest infographic research report. If you are no longer interested in SEEK, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
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.