Is Now The Time To Look At Buying Intellect Design Arena Limited (NSE:INTELLECT)?

Intellect Design Arena Limited (NSE:INTELLECT), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NSEI over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Intellect Design Arena’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Intellect Design Arena

What Is Intellect Design Arena Worth?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 45.06x is currently trading slightly above its industry peers’ ratio of 41.27x, which means if you buy Intellect Design Arena today, you’d be paying a relatively sensible price for it. And if you believe Intellect Design Arena should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Intellect Design Arena’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Intellect Design Arena generate?

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. 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. Intellect Design Arena'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? INTELLECT’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 INTELLECT? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on INTELLECT, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for INTELLECT, 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.

If you want to dive deeper into Intellect Design Arena, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Intellect Design Arena and you'll want to know about this.

If you are no longer interested in Intellect Design Arena, 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.