At US$59.93, Is It Time To Put Frontdoor, Inc. (NASDAQ:FTDR) On Your Watch List?

While Frontdoor, Inc. (NASDAQ:FTDR) might not have the largest market cap around , it saw a significant share price rise of 60% in the past couple of months on the NASDAQGS. The recent share price gains has brought the company back closer to its yearly peak. With many analysts covering the mid-cap 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 Frontdoor’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What's The Opportunity In Frontdoor?

Great news for investors – Frontdoor is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $78.17, but it is currently trading at US$59.93 on the share market, meaning that there is still an opportunity to buy now. However, given that Frontdoor’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

View our latest analysis for Frontdoor

What kind of growth will Frontdoor 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. 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. However, with a relatively muted profit growth of 4.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Frontdoor, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since FTDR is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on FTDR for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FTDR. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Frontdoor at this point in time. Every company has risks, and we've spotted 2 warning signs for Frontdoor you should know about.

If you are no longer interested in Frontdoor, 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.