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When Should You Buy Groupon Inc (NASDAQ:GRPN)?

Groupon Inc (NASDAQ:GRPN), which is in the online retail business, and is based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $5.27 and falling to the lows of $3.17. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Groupon’s current trading price of $3.28 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Groupon’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Groupon

What’s the opportunity in Groupon?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.4% below my intrinsic value, which means if you buy Groupon today, you’d be paying a fair price for it. And if you believe the company’s true value is $3.51, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Groupon’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Groupon?

NasdaqGS:GRPN Future Profit October 26th 18
NasdaqGS:GRPN Future Profit October 26th 18

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. With profit expected to grow by 95% over the next year, the near-term future seems bright for Groupon. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? GRPN’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 conviction to buy should the price fluctuates below the true value?

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Are you a potential investor? If you’ve been keeping an eye on GRPN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Groupon. You can find everything you need to know about Groupon in the latest infographic research report. If you are no longer interested in Groupon, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.