dotdigital Group Plc (LON:DOTD), is not the largest company out there, but it received a lot of attention from a substantial price increase on the AIM over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at dotdigital Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for dotdigital Group

What's The Opportunity In dotdigital Group?

According to my valuation model, dotdigital Group seems to be fairly priced at around 19.97% above my intrinsic value, which means if you buy dotdigital Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ￡0.79, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since dotdigital Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

What kind of growth will dotdigital Group generate?

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. dotdigital Group's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? DOTD’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on DOTD, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.