Trade Me Group Limited (NZSE:TME), a online retail company based in New Zealand, saw significant share price volatility over the past couple of months on the NZSE, rising to the highs of NZ$4.93 and falling to the lows of NZ$4.31. 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 Trade Me Group’s current trading price of NZ$4.5 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 Trade Me Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Trade Me Group

What is Trade Me Group worth?

The stock is currently trading at NZ$4.5 on the share market, which means it is overvalued by 65% compared to my intrinsic value of NZ$2.72. Not the best news for investors looking to buy! Furthermore, Trade Me Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will Trade Me Group generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Trade Me Group’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in Trade Me Group’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 Trade Me Group 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 an eye on Trade Me Group for a while, 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 Trade Me Group, which means it’s worth diving deeper into other factors 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 Trade Me Group. You can find everything you need to know about Trade Me Group in the latest infographic research report. If you are no longer interested in Trade Me Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.