IAC/InterActiveCorp (NASDAQ: IAC) investors have enjoyed seeing the stock price increase by 19.7% over the last month. As a large-cap 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 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 IAC/InterActiveCorp?
Welcoming news for investors, IAC/InterActiveCorp is still trading at a fairly cheap price. According to our 5 valuation analyses, the intrinsic value for the stock is $184.31 per share and is currently trading at $158.75 in the market. This means that there is still an opportunity to buy now.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$231.22||45.7%|
|5-yr DCF Revenue Exit||$217.06||36.7%|
|Peer Revenue Multiples||$151.35||-4.7%|
|Peer EBITDA Multiples||$152.80||-3.7%|
|Peer P/E Multiples||$169.14||6.5%|
Click on any of the analyses above to view the latest model with real-time data.
What’s more interesting is that IAC/InterActiveCorp’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can We Expect Growth From IAC/InterActiveCorp?
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
With EBITDA expected to grow on average of 41.1% over the next couple years, the future certainly appears bright for IAC/InterActiveCorp. It looks like higher cash flows are in the cards for shareholders, which should feed into a higher share valuation.
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 IAC/InterActiveCorp?
IAC/InterActiveCorp’s optimistic future growth does not appear to have been fully factored into the current share price with the stock still trading below its intrinsic value. Therefore, it may be a good time to purchase shares or increase your position in the company.
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 IAC/InterActiveCorp by taking a look at the following:
Valuation Metrics: how much upside do shares of IAC/InterActiveCorp have based on the Ben Graham Formula? Take a look at our Ben Graham Formula data explorer which also compares the company’s upside to its peers.
Risk Metrics: what is IAC/InterActiveCorp’s Altman Z score? It’s a famous formula used to predict the probability that a firm will go into bankruptcy within two years. View the company’s Altman Z score here.
Efficiency Metrics: how much free cash flow does IAC/InterActiveCorp generate as a percentage of total sales? Has it been increasing or decreasing over time? Review the firm’s free cash flow margin here.
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.