Why Gen Digital Inc. (NASDAQ:GEN) Could Be Worth Watching

Gen Digital Inc. (NASDAQ:GEN) saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$23.60 and falling to the lows of US$16.42. 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 Gen Digital's current trading price of US$16.42 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 Gen Digital’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 Gen Digital

What's The Opportunity In Gen Digital?

Great news for investors – Gen Digital is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Gen Digital’s ratio of 18.94x is below its peer average of 42.02x, which indicates the stock is trading at a lower price compared to the Software industry. What’s more interesting is that, Gen Digital’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Gen Digital generate?

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. Gen Digital's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since GEN is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on GEN for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GEN. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

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. To that end, you should learn about the 5 warning signs we've spotted with Gen Digital (including 1 which doesn't sit too well with us).

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

What are the risks and opportunities for Gen Digital?

NasdaqGS:GEN

Gen Digital

Gen Digital Inc. provides cyber safety solutions for consumers in the United States, Canada, Latin America, Europe, the Middle East, Africa, the Asia Pacific, and Japan.Show more

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Rewards

• Trading at 46.9% below our estimate of its fair value

• Earnings are forecast to grow 23.08% per year

Risks

• Debt is not well covered by operating cash flow

• Shareholders have been diluted in the past year

• Profit margins (17.8%) are lower than last year (33.6%)

• Large one-off items impacting financial results

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Share Price

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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.