What Is Chegg, Inc.'s (NYSE:CHGG) Share Price Doing?

Chegg, Inc. (NYSE:CHGG) saw significant share price movement during recent months on the NYSE, rising to highs of US$89.90 and falling to the lows of US$72.78. 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 Chegg's current trading price of US$78.54 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Chegg’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 Chegg

What's the opportunity in Chegg?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.17% above my intrinsic value, which means if you buy Chegg today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $71.94, there’s only an insignificant downside when the price falls to its real value. What's more, Chegg’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Chegg 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. 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. With revenues expected to grow by 65% over the next couple of years, the future seems bright for Chegg. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CHGG’s positive outlook, 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 CHGG, 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.

So while earnings quality is important, it's equally important to consider the risks facing Chegg at this point in time. For example - Chegg has 1 warning sign we think you should be aware of.

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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.
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