Is It Time To Consider Buying Sapiens International Corporation N.V. (NASDAQ:SPNS)?

Sapiens International Corporation N.V. (NASDAQ:SPNS), might not be a large cap stock, but it saw a decent share price growth of 12% on the NASDAQGS over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Sapiens International’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Sapiens International

Is Sapiens International Still Cheap?

According to our valuation model, Sapiens International seems to be fairly priced at around 17% below our intrinsic value, which means if you buy Sapiens International today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $32.97, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Sapiens International’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 does the future of Sapiens International look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Sapiens International's earnings over the next few years are expected to increase by 37%, 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? It seems like the market has already priced in SPNS’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 an eye on SPNS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

So while earnings quality is important, it's equally important to consider the risks facing Sapiens International at this point in time. In terms of investment risks, we've identified 1 warning sign with Sapiens International, and understanding this should be part of your investment process.

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

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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.