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Is It Time To Consider Buying NXP Semiconductors N.V. (NASDAQ:NXPI)?

Today we're going to take a look at the well-established NXP Semiconductors N.V. (NASDAQ:NXPI). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at NXP Semiconductors’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for NXP Semiconductors

What's The Opportunity In NXP Semiconductors?

NXP Semiconductors appears to be overvalued by 33% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$234 on the market compared to our intrinsic value of $176.01. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since NXP Semiconductors’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.

What does the future of NXP Semiconductors look like?

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Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. NXP Semiconductors' earnings over the next few years are expected to increase by 28%, 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? It seems like the market has well and truly priced in NXPI’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe NXPI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

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Are you a potential investor? If you’ve been keeping an eye on NXPI for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for NXPI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about NXP Semiconductors as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 3 warning signs for NXP Semiconductors you should know about.

If you are no longer interested in NXP Semiconductors, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.