Light & Wonder, Inc. (NASDAQ:LNW), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$113 and falling to the lows of US$85.42. 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 Light & Wonder's current trading price of US$85.42 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 Light & Wonder's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

What Is Light & Wonder Worth?

The stock seems fairly valued at the moment according to our valuation model. It's trading around 19% below our intrinsic value, which means if you buy Light & Wonder today, you'd be paying a fair price for it. And if you believe that the stock is really worth $105.90, then there isn't much room for the share price grow beyond what it's currently trading. So, is there another chance to buy low in the future? Given that Light & Wonder'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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Light & Wonder look like?

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. Light & Wonder's earnings over the next few years are expected to increase by 98%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in LNW's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you've been keeping an eye on LNW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, Light & Wonder has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you are no longer interested in Light & Wonder, 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.