JFrog Ltd. (NASDAQ:FROG), might not be a large cap stock, but it saw a significant share price rise of 21% 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 mid-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 JFrog's outlook and value based on the most recent financial data to see if the opportunity still exists.
Is JFrog Still Cheap?
According to our valuation model, JFrog seems to be fairly priced at around 0.5% below our intrinsic value, which means if you buy JFrog today, you'd be paying a fair price for it. And if you believe the company's true value is $29.97, then there isn't much room for the share price grow beyond what it's currently trading. Furthermore, JFrog's low beta implies that the stock is less volatile than the wider market.
What does the future of JFrog look like?
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. 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. However, with a negative profit growth of -16% expected over the next couple of years, near-term growth certainly doesn't appear to be a driver for a buy decision for JFrog. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Currently, FROG appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on FROG for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there's less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help gel your views on FROG should the price fluctuate below its true value.
So while earnings quality is important, it's equally important to consider the risks facing JFrog at this point in time. For example, JFrog has 4 warning signs (and 1 which is concerning) we think you should know about.
If you are no longer interested in JFrog, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
