Is It Time To Consider Buying New Relic, Inc. (NYSE:NEWR)?

New Relic, Inc. (NYSE:NEWR), which is in the software business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $108.45 and falling to the lows of $86.51. 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 New Relic’s current trading price of $87.9 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 New Relic’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 New Relic

What’s the opportunity in New Relic?

According to my valuation model, New Relic seems to be fairly priced at around 0.010% above my intrinsic value, which means if you buy New Relic today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $87.89, then there isn’t really any room for the share price grow beyond what it’s currently trading. What’s more, New Relic’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will New Relic generate?

NYSE:NEWR Past and Future Earnings, August 5th 2019
NYSE:NEWR Past and Future Earnings, August 5th 2019

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 50% over the next couple of years, the future seems bright for New Relic. 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? It seems like the market has already priced in NEWR’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 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 NEWR, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on New Relic. You can find everything you need to know about New Relic in the latest infographic research report. If you are no longer interested in New Relic, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.