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While Stitch Fix, Inc. (NASDAQ:SFIX) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$8.56 at one point, and dropping to the lows of US$4.18. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Stitch Fix's current trading price of US$4.18 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 Stitch Fix’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 Stitch Fix
What's The Opportunity In Stitch Fix?
Good news, investors! Stitch Fix is still a bargain right now. According to my valuation, the intrinsic value for the stock is $6.38, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Stitch Fix’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 Stitch Fix?
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. With profit expected to grow by 41% over the next couple of years, the future seems bright for Stitch Fix. 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? Since SFIX is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on SFIX for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SFIX. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.