Is There Now An Opportunity In Aspen Technology, Inc. (NASDAQ:AZPN)?

Today we're going to take a look at the well-established Aspen Technology, Inc. (NASDAQ:AZPN). The company's stock saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$244 and falling to the lows of US$175. 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 Aspen Technology's current trading price of US$175 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 Aspen Technology’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 Aspen Technology

What Is Aspen Technology Worth?

The stock is currently trading at US$175 on the share market, which means it is overvalued by 24% compared to my intrinsic value of $140.66. This means that the opportunity to buy Aspen Technology at a good price has disappeared! Another thing to keep in mind is that Aspen Technology’s share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can We Expect Decent Returns From Aspen Technology?

What kind of returns can we expect from Aspen Technology in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. We can determine the quality of a stock many ways; one way is to look at how much return it generates relative to the money we’ve invested in the stock. Aspen Technology is expected to return 1.9% of your investment in the next couple of years if you buy the stock today. This is a pretty average return, which doesn’t significantly add much to the case for owning the stock.

What This Means For You

Are you a shareholder?AZPN’s price has risen beyond its fair value, as analyst consensus illustrates relatively subdued upcoming returns. This begs another question – could now be the time to sell the stock? If you believe AZPN 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 AZPN 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. In addition to this, the subdued returns expected in the future doesn’t help with the “buy” case for AZPN. However, there are also other important factors we haven’t considered today, such as the financial strength of AZPN, which could help explain the overvaluation.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Aspen Technology.

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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.