While SPS Commerce, Inc. (NASDAQ:SPSC) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$215 and falling to the lows of US$185. 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 SPS Commerce's current trading price of US$193 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 SPS Commerce’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 analysis for SPS Commerce

What's The Opportunity In SPS Commerce?

The stock is currently trading at US$193 on the share market, which means it is overvalued by 28% compared to our intrinsic value of $151.22. This means that the buying opportunity has probably disappeared for now. Furthermore, SPS Commerce’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from SPS Commerce?

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. With profit expected to grow by 40% over the next couple of years, the future seems bright for SPS Commerce. 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? SPSC’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SPSC 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 SPSC 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 SPSC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.