China Distance Education Holdings Limited (NYSE:DL), which is in the consumer services business, and is based in China, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$10.96 at one point, and dropping to the lows of US$7.45. 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 China Distance Education Holdings’s current trading price of US$7.97 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 China Distance Education Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is China Distance Education Holdings worth?
Good news, investors! China Distance Education Holdings is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $15.05, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that China Distance Education Holdings’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 China Distance Education Holdings?
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 the company’s future expectations. With profit expected to grow by 63% over the next couple of years, the future seems bright for China Distance Education Holdings. 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 DL is currently undervalued, it may be a great time to increase 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 DL for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DL. 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on China Distance Education Holdings. You can find everything you need to know about China Distance Education Holdings in the latest infographic research report. If you are no longer interested in China Distance Education Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at [email protected]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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