At US$1.18, Is It Time To Put Velodyne Lidar, Inc. (NASDAQ:VLDR) On Your Watch List?

Velodyne Lidar, Inc. (NASDAQ:VLDR), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. 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, could the stock still be trading at a relatively cheap price? Let’s examine Velodyne Lidar’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Velodyne Lidar

What's The Opportunity In Velodyne Lidar?

According to my valuation model, Velodyne Lidar seems to be fairly priced at around 9.71% above my intrinsic value, which means if you buy Velodyne Lidar today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $1.08, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Velodyne Lidar’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Velodyne Lidar look like?

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. Velodyne Lidar's earnings over the next few years are expected to increase by 54%, 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? VLDR’s optimistic 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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on VLDR, 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 Velodyne Lidar at this point in time. For example, Velodyne Lidar has 4 warning signs (and 1 which is significant) we think you should know about.

If you are no longer interested in Velodyne Lidar, 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.