At US$62.96, Is Smartsheet Inc. (NYSE:SMAR) Worth Looking At Closely?

By
Simply Wall St
Published
January 10, 2022
NYSE:SMAR
Source: Shutterstock

While Smartsheet Inc. (NYSE:SMAR) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$79.82 and falling to the lows of US$59.49. 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 Smartsheet's current trading price of US$62.96 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 Smartsheet’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Smartsheet

Is Smartsheet still cheap?

Great news for investors – Smartsheet is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $85.27, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Smartsheet’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Smartsheet?

earnings-and-revenue-growth
NYSE:SMAR Earnings and Revenue Growth January 10th 2022

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. Though in the case of Smartsheet, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although SMAR is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to SMAR, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on SMAR for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Smartsheet as a business, it's important to be aware of any risks it's facing. For instance, we've identified 5 warning signs for Smartsheet (1 is a bit unpleasant) you should be familiar with.

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

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