Is Now The Time To Look At Buying ZipRecruiter, Inc. (NYSE:ZIP)?

While ZipRecruiter, Inc. (NYSE:ZIP) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NYSE 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. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at ZipRecruiter’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for ZipRecruiter

What's The Opportunity In ZipRecruiter?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that ZipRecruiter’s ratio of 29.16x is trading slightly above its industry peers’ ratio of 25.85x, which means if you buy ZipRecruiter today, you’d be paying a relatively reasonable price for it. And if you believe that ZipRecruiter should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. So, is there another chance to buy low in the future? Given that ZipRecruiter’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of ZipRecruiter 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for ZipRecruiter, at least in the near future.

What This Means For You

Are you a shareholder? Currently, ZIP appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on ZIP, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ZIP for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on ZIP should the price fluctuate below the industry PE ratio.

If you want to dive deeper into ZipRecruiter, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with ZipRecruiter, and understanding them should be part of your investment process.

If you are no longer interested in ZipRecruiter, 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.