OpenLimit Holding AG (DB:O5H), a software company based in Switzerland, received a lot of attention from a substantial price movement on the DB in the over the last few months, increasing to €0.33 at one point, and dropping to the lows of €0.27. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether OpenLimit Holding’s current trading price of €0.28 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 OpenLimit Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for OpenLimit Holding
Is OpenLimit Holding still cheap?
OpenLimit Holding appears to be overvalued by 96% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €0.28 on the market compared to my intrinsic value of €0.14. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that OpenLimit Holding’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 OpenLimit Holding?
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. With revenue expected to more than double in the next few years, the future appears to be extremely bright for OpenLimit Holding. If expenses can also be maintained, it looks like higher cash flows 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 O5H’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe O5H 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.