Should You Think About Buying SecureWorks Corp. (NASDAQ:SCWX) Now?

SecureWorks Corp. Class A -2.97%

SecureWorks Corp. Class A

SCWX

5.89

-2.97%

While SecureWorks Corp. (NASDAQ:SCWX) might not have the largest market cap around , it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine SecureWorks’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for SecureWorks

What Is SecureWorks Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 4.53% above our intrinsic value, which means if you buy SecureWorks today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $7.06, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that SecureWorks’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will SecureWorks generate?

earnings-and-revenue-growth
NasdaqGS:SCWX Earnings and Revenue Growth December 30th 2023

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. SecureWorks' earnings over the next few years are expected to increase by 60%, 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? SCWX’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 track record of its management team. 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?

Are you a potential investor? If you’ve been keeping tabs on SCWX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 2 warning signs for SecureWorks (1 doesn't sit too well with us!) and we strongly recommend you look at these before investing.

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

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