When Should You Buy Nutanix, Inc. (NASDAQ:NTNX)?

By
Simply Wall St
Published
March 18, 2022
NasdaqGS:NTNX
Source: Shutterstock

Nutanix, Inc. (NASDAQ:NTNX), is not the largest company out there, but it saw a decent share price growth in the teens level on the NASDAQGS over the last few months. With many analysts covering the mid-cap 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 Nutanix’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Nutanix

What's the opportunity in Nutanix?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.7% below my intrinsic value, which means if you buy Nutanix today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $27.22, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Nutanix’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Nutanix generate?

earnings-and-revenue-growth
NasdaqGS:NTNX Earnings and Revenue Growth March 18th 2022

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. With profit expected to grow by 65% over the next couple of years, the future seems bright for Nutanix. 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 NTNX’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 tabs on NTNX, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Nutanix at this point in time. For instance, we've identified 5 warning signs for Nutanix (1 shouldn't be ignored) you should be familiar with.

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

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.