Let’s talk about the popular GoDaddy Inc. (NYSE: GDDY). The company’s shares have seen significant price movements in recent months on the NYSE, hitting highs of US $ 89.11 and falling to lows of US $ 69.38. Certain movements in stock prices can give investors a better opportunity to get into the stock, and potentially buy at a lower price. One question to answer is whether GoDaddy’s current trading price of US $ 71.12 reflects the true value of the large cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at GoDaddy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest review for GoDaddy
What is GoDaddy worth?
According to my multiple price model, where I compare the company’s price / earnings ratio to the industry average, the stock currently looks expensive. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find GoDaddy’s ratio of 62.42x to be above its peer average of 34.91x, suggesting that the stock is trading at a higher price than the IT industry. On the other hand, GoDaddy’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you think the stock price should eventually reach levels around its industry peers, a low beta might suggest it’s unlikely to do so anytime soon, and once there. is, it can be difficult to fall back into an attractive buying range.
Can we expect GoDaddy to grow?
Investors looking to grow their portfolio may want to consider the prospects of a company before buying its shares. While value investors argue that intrinsic value versus price matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to more than double over the next two years, the future looks bright for GoDaddy. It looks like a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you:
Are you a shareholder? It appears that the market has indeed taken into account the positive outlook for GDDY, with stocks trading above industry price multiples. At this current price, shareholders may ask a different question: should I sell? If you think GDDY should trade below its current price, selling high and buying it back when its price drops to the industry PE ratio can be profitable. But before you make that decision, check to see if its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on GDDY for a while, it might not be the best time to enter stock. The price has topped its industry peers, which means there is likely to be no more benefit from poor pricing. However, the bullish outlook is encouraging for GDDY, which means it is worth exploring other factors in order to take advantage of the next price drop.
Keep in mind that when it comes to analyzing a stock, it is worth noting the risks involved. For example, GoDaddy has 5 warning signs (and 2 that make us uncomfortable) we think you should know about.
If you’re no longer interested in GoDaddy, you can use our free platform to view our list of over 50 other high growth stocks.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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