Should You Investigate Appian Corporation (NASDAQ:APPN) At US$76.80?

By
Simply Wall St
Published
November 21, 2021
NasdaqGM:APPN
Source: Shutterstock

While Appian Corporation (NASDAQ:APPN) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQGM over the last few months, increasing to US$114 at one point, and dropping to the lows of US$76.80. 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 Appian's current trading price of US$76.80 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Appian’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Appian

What is Appian worth?

According to my valuation model, Appian seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Appian today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $87.99, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Appian’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 Appian generate?

earnings-and-revenue-growth
NasdaqGM:APPN Earnings and Revenue Growth November 22nd 2021

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. With profit expected to grow by 33% over the next couple of years, the future seems bright for Appian. 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 APPN’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on APPN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 2 warning signs for Appian and we think they deserve your attention.

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

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