Today we're going to take a look at the well-established NXP Semiconductors N.V. (NASDAQ:NXPI). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Let's examine NXP Semiconductors's valuation and outlook in more detail to determine if there's still a bargain opportunity.
What Is NXP Semiconductors Worth?
The stock is currently trading at US$230 on the share market, which means it is overvalued by 30% compared to our intrinsic value of $176.67. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since NXP Semiconductors's share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from NXP Semiconductors?
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. 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. With profit expected to grow by 28% over the next couple of years, the future seems bright for NXP Semiconductors. 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? NXPI's optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe NXPI 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 NXPI 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 NXPI, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about NXP Semiconductors as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for NXP Semiconductors you should be aware of.
If you are no longer interested in NXP Semiconductors, 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.
