What Is TDC SOFT Inc.'s (TSE:4687) Share Price Doing?

While TDC SOFT Inc. (TSE:4687) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the TSE over the last few months. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today we will analyse the most recent data on TDC SOFT’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for TDC SOFT

Is TDC SOFT Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.51% above our intrinsic value, which means if you buy TDC SOFT today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth ¥2385.92, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, TDC SOFT has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from TDC SOFT?

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. TDC SOFT's earnings over the next few years are expected to increase by 23%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 4687’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on 4687, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that TDC SOFT has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in TDC SOFT, 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.