Cognyte Software Ltd. (NASDAQ:CGNT) may not be a large cap stock, but it has received a lot of attention in recent months due to a substantial price increase on the NASDAQGS. The company is inching closer to its annual highs after the recent share price surge. Because it is a small cap stock, which often does not have high analyst coverage, there is generally more opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity to buy here? Today we’ll analyze the latest data on Cognyte Software’s prospects and valuation to see if the opportunity still exists.
Check out our latest analysis for Cognyte Software
Good news, investors! Cognyte Software is still a bargain right now. Our valuation model shows that the stock’s intrinsic value is $13.36, but it is currently trading on the stock market at $8.13, meaning there is still an opportunity to buy now. However, since Cognyte Software’s stock is quite volatile (i.e. its price movements are greater than the rest of the market), this could mean the price could sink lower, giving us another chance to to buy. This is based on the high beta, which is a good indicator of stock price volatility.
Investors looking for growth in their portfolio may want to consider a company’s prospects before buying shares. While value investors would argue that it is the intrinsic value relative to the price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. However, in the case of Cognyte Software, it is expected to deliver highly negative earnings growth in the near future, which does not help build its investment thesis. It appears that the risk of future uncertainty is high, at least in the short term.
Are you a shareholder? Although CGNT is currently undervalued, the negative outlook brings some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CGNT, or whether diversifying into another stock might be a better move for your overall risk and return.
Are you a potential investor? If you’ve been keeping an eye on CGNT for a while but are hesitant to take the plunge, we recommend doing further research on the stock. Given the current undervaluation, this is a good time to make a decision. But keep in mind the risks associated with negative growth prospects in the future.
Keep in mind that when analyzing a stock, it’s worth considering the risks associated with it. When we did our research, we found 3 warning signs for Cognyte Software (1 is significant!) that we believe deserve your full attention.
