Zendesk Inc (NYSE:ZEN), a software company based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. 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 take a look at ZEN’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for ZEN
What is ZEN worth?
My valuation model shows that the stock’s value should be $16.13 but it is currently trading at $29.3 on the share market, meaning that the opportunity to buy ZEN at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that ZEN’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 ZEN?
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 ZEN future expectations. With profit expected to grow by 46.76% over the next couple of years, the future seems bright for ZEN. 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 ZEN’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 ZEN 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 ZEN 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 ZEN, 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 Zendesk. You can find everything you need to know about ZEN in the latest infographic research report. If you are no longer interested in Zendesk, 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.