When Should You Buy Snowflake Inc. (NYSE:SNOW)?

Let's talk about the popular Snowflake Inc. (NYSE:SNOW). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$236 and falling to the lows of US$145. 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 Snowflake's current trading price of US$156 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 Snowflake’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 Snowflake

What's The Opportunity In Snowflake?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 10% below our intrinsic value, which means if you buy Snowflake today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $174.10, then there’s not much of an upside to gain from mispricing. What's more, Snowflake’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Snowflake 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. However, with a relatively muted profit growth of 9.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Snowflake, at least in the short term.

What This Means For You

Are you a shareholder? SNOW’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 SNOW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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 Snowflake at this point in time. At Simply Wall St, we found 2 warning signs for Snowflake and we think they deserve your attention.

If you are no longer interested in Snowflake, 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.