At US$16.03, Is It Time To Put Warby Parker Inc. (NYSE:WRBY) On Your Watch List?

Warby Parker Inc. (NYSE:WRBY), might not be a large cap stock, but it saw a significant share price rise of 25% in the past couple of months on the NYSE. 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 Warby Parker’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Warby Parker

What's The Opportunity In Warby Parker?

The stock is currently trading at US$16.03 on the share market, which means it is overvalued by 27% compared to our intrinsic value of $12.65. This means that the opportunity to buy Warby Parker at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Warby Parker’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.

What kind of growth will Warby Parker 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. With profit expected to grow by 97% over the next year, the near-term future seems bright for Warby Parker. 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 well and truly priced in WRBY’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe WRBY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on WRBY for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for WRBY, which means it’s worth diving deeper into other factors 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 Warby Parker at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Warby Parker.

If you are no longer interested in Warby Parker, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.