Stock Analysis

Is Now An Opportune Moment To Examine Coupa Software Incorporated (NASDAQ:COUP)?

NasdaqGS:COUP
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While Coupa Software Incorporated (NASDAQ:COUP) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$232 and falling to the lows of US$116. 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 Coupa Software's current trading price of US$116 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 Coupa Software’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Coupa Software

What's the opportunity in Coupa Software?

According to my valuation model, Coupa Software seems to be fairly priced at around 7.27% above my intrinsic value, which means if you buy Coupa Software today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $108.11, 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 Coupa Software’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 kind of growth will Coupa Software generate?

earnings-and-revenue-growth
NasdaqGS:COUP Earnings and Revenue Growth February 20th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 Coupa Software, at least in the near future.

What this means for you:

Are you a shareholder? COUP seems fairly priced right now, 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 optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on COUP for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which 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 crystalize your views on COUP should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Coupa Software at this point in time. For example, Coupa Software has 4 warning signs (and 1 which can't be ignored) we think you should know about.

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

Valuation is complex, but we're helping make it simple.

Find out whether Coupa Software is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.