What Is Cloudflare, Inc.'s (NYSE:NET) Share Price Doing?

Today we're going to take a look at the well-established Cloudflare, Inc. (NYSE:NET). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$72.93 at one point, and dropping to the lows of US$55.53. 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 Cloudflare's current trading price of US$55.53 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 Cloudflare’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 Cloudflare

Is Cloudflare Still Cheap?

According to my valuation model, Cloudflare seems to be fairly priced at around 0.8% below my intrinsic value, which means if you buy Cloudflare today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $55.95, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Cloudflare’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Cloudflare generate?

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. 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. With profit expected to grow by 30% over the next couple of years, the future seems bright for Cloudflare. 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 NET’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 NET, 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. You'd be interested to know, that we found 3 warning signs for Cloudflare and you'll want to know about these.

If you are no longer interested in Cloudflare, 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.