While Rapid7, Inc. (NASDAQ:RPD) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$61.47 and falling to the lows of US$49.17. 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 Rapid7's current trading price of US$49.17 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Rapid7's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Rapid7 Still Cheap?
Good news, investors! Rapid7 is still a bargain right now. According to our valuation, the intrinsic value for the stock is $73.26, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Rapid7'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 Rapid7?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Rapid7's case, its revenues over the next few years are expected to grow by 40%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since RPD is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic 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 financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you've been keeping an eye on RPD 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 RPD. 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 investment decision.
If you want to dive deeper into Rapid7, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Rapid7 (1 is concerning) you should be familiar with.
If you are no longer interested in Rapid7, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.