Grand Canyon Education Inc (NASDAQ:LOPE), a diversified consumer services company based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGS. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine LOPE’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Grand Canyon Education
What is LOPE worth?
LOPE appears to be overvalued by 33% at the moment, based on my discounted cash flow valuation. The stock is currently priced at $95.4 on the market compared to my intrinsic value of $71.76. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that LOPE’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.
What does the future of LOPE look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 profit expected to grow by a double-digit 17.09% over the next couple of years, the outlook is positive for LOPE. 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 LOPE’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 LOPE 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 LOPE 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 LOPE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.