Is It Too Late To Consider Buying Webjet Limited (ASX:WEB)?

While Webjet Limited (ASX:WEB) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the ASX. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Webjet’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Webjet

What's The Opportunity In Webjet?

According to my valuation model, Webjet seems to be fairly priced at around 1.4% below my intrinsic value, which means if you buy Webjet today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$6.98, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Webjet’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 does the future of Webjet look like?

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. In Webjet's case, its revenues over the next few years are expected to grow by 89%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? WEB’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 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 WEB, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Webjet as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Webjet you should be aware of.

If you are no longer interested in Webjet, 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.