Yirendai Ltd (NYSE:YRD), a general company based in China, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $43.13 and falling to the lows of $22.46. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Yirendai’s current trading price of $22.46 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Yirendai’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View out our latest analysis for Yirendai
Is Yirendai still cheap?Good news, investors! Yirendai is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $131.21, but it is currently trading at US$22.46 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Yirendai’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 Yirendai generate?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. Yirendai’s earnings over the next few years are expected to increase by 59.88%, 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? Since YRD is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on YRD for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy YRD. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Yirendai. You can find everything you need to know about Yirendai in the latest infographic research report. If you are no longer interested in Yirendai, you can use our free platform to see my list of over 50 other stocks with a high growth potential.