Endurance International Group Hldgs Inc (NASDAQ: EIGI) investors have enjoyed seeing the stock price increase by 20.7% over the last month. As a small-cap stock with decent 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 take a look at the company’s expected growth and valuation based on its most recent financial data to see if there is further upside moving forward.
What’s The Opportunity In Endurance International?
According to our 5 valuation models, Endurance International seems to be fairly priced in the market at 8.4% below its intrinsic value. Meaning if you buy Endurance International today, you’d be paying a reasonable price for it. If you believe the company’s fair value is $9.86, then there’s not significant upside to be gained from mispricing.
| Analysis | Model Fair Value | Upside (Downside) |
|---|---|---|
| 10-yr DCF Revenue Exit | $10.23 | 12.4% |
| 5-yr DCF Revenue Exit | $9.84 | 8.1% |
| Peer Revenue Multiples | $10.11 | 11.1% |
| 10-yr DCF Growth Exit | $9.86 | 8.3% |
| 5-yr DCF Growth Exit | $9.28 | 2.0% |
| Average | $9.86 | 8.4% |
Click on any of the analyses above to view the latest model with real-time data.
Although, there may be an opportunity to buy in the future. This is because Endurance International’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can We Expect Growth From Endurance International?
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 matters the most, a more compelling investment thesis would be high growth potential at a cheap price.
source: finbox.io data explorer
Endurance International’s revenue growth is expected to average 0.8% over the next five fiscal years indicating that the core business could be in real trouble. In fact, this could imply that its products or services are losing demand and/or becoming irrelevant.
What This Means For Investors
Growth investors typically look to invest in companies that are expanding sales, gaining market share and building customer bases. On the other hand, value investors often argue that the most successful investments are in companies that deliver the highest cash flows while trading at the lowest valuation.
But why not put those hands together? A company that has both growth and value characteristics would certainly make the most attractive investment. So what did we find out about Endurance International?
Endurance International’s future growth is relatively low and the stock appears fairly valued at the moment according to our valuation models. As a shareholder, you may have already conducted your fundamental analysis on the company and the stock’s recent appreciation may have been expected. Therefore, it may be time for investors to take some chips off the table. For prospective investors looking to purchase shares of Endurance International, it may be worth holding off until the stock develops a larger margin of safety.
It is important to note that there are a variety of other fundamental factors that I have not taken into consideration in this article. If you have not done so already, I highly recommend that you complete your research on Endurance International by taking a look at the following:
Valuation Metrics: how much upside do shares of Endurance International have based on Wall Street’s consensus price target? Take a look at our analyst upside data explorer that compares the company’s upside relative to its peers.
Risk Metrics: how is Endurance International’s financial health? Find out by viewing our financial leverage data metric which plots the dollars in total assets for each dollar of common equity over time.
Efficiency Metrics: is management becoming more or less efficient over time? Find out by analyzing the company’s asset turnover ratio which measures the dollars in revenue a company generates per dollar of assets.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.
