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Peloton Interactive, Inc. (NASDAQ:PTON), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Peloton Interactive’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Peloton Interactive
What's The Opportunity In Peloton Interactive?
The stock is currently trading at US$9.23 on the share market, which means it is overvalued by 40% compared to our intrinsic value of $6.60. This means that the opportunity to buy Peloton Interactive at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Peloton Interactive’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Peloton Interactive?
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 73% over the next couple of years, the future seems bright for Peloton Interactive. 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 PTON’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 PTON 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 PTON 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 PTON, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.