At AU$29.44, Is It Time To Put SEEK Limited (ASX:SEK) On Your Watch List?

While SEEK Limited (ASX:SEK) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$35.74 at one point, and dropping to the lows of AU$26.93. 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 SEEK's current trading price of AU$29.44 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 SEEK’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 SEEK

What's the opportunity in SEEK?

The stock is currently trading at AU$29.44 on the share market, which means it is overvalued by 37% compared to my intrinsic value of A$21.52. This means that the opportunity to buy SEEK at a good price has disappeared! But, is there another opportunity to buy low in the future? Since SEEK’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 SEEK look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. SEEK's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in SEK’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SEK 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 tabs on SEK for some time, 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 SEK, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about SEEK as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with SEEK, and understanding this should be part of your investment process.

If you are no longer interested in SEEK, 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.