Yahoo Finance What Is Rambus Inc.'s (NASDAQ:RMBS) Share Price Doing?
While Rambus Inc. (NASDAQ:RMBS) might not have the largest market cap around , it saw a decent share price growth of 13% on the NASDAQGS over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a mid-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, what if the stock is still a bargain? Let’s take a look at Rambus’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Rambus
Is Rambus Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 18.24% above our intrinsic value, which means if you buy Rambus today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $50.28, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Rambus’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 Rambus?
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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Rambus, at least in the near future.
What This Means For You
Are you a shareholder? RMBS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 RMBS for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems 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 RMBS should the price fluctuate below its true value.
So while earnings quality is important, it's equally important to consider the risks facing Rambus at this point in time. To help with this, we've discovered 3 warning signs (2 make us uncomfortable!) that you ought to be aware of before buying any shares in Rambus.
If you are no longer interested in Rambus, 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.
