At US$13.85, Is It Time To Put Benefitfocus, Inc. (NASDAQ:BNFT) On Your Watch List?

Benefitfocus, Inc. (NASDAQ:BNFT), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGM over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Benefitfocus’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Benefitfocus

Is Benefitfocus still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.98% above my intrinsic value, which means if you buy Benefitfocus today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $12.71, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Benefitfocus’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.

Can we expect growth from Benefitfocus?

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. In the upcoming year, Benefitfocus' earnings are expected to increase by 34%, 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? BNFT’s optimistic future growth appears to have been factored into the current share price, 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 tabs on BNFT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Benefitfocus has 2 warning signs we think you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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