Brightcove Inc. (NASDAQ:BCOV), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$7.47 and falling to the lows of US$5.92. 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 Brightcove's current trading price of US$5.95 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Brightcove'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 Brightcove
Is Brightcove Still Cheap?
The stock seems fairly valued at the moment according to my valuation model. It's trading around 5.1% below my intrinsic value, which means if you buy Brightcove today, you'd be paying a reasonable price for it. And if you believe the company's true value is $6.27, then there's not much of an upside to gain from mispricing. Furthermore, Brightcove's low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Brightcove?
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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Brightcove, at least in the near future.
What This Means For You
Are you a shareholder? Currently, BCOV appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping tabs on BCOV for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there's less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help crystalize your views on BCOV should the price fluctuate below its true value.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Brightcove has 1 warning sign we think you should be aware of.
If you are no longer interested in Brightcove, 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.
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