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Is It Too Late To Consider Buying Seagate Technology plc (NASDAQ:STX)?

Today we're going to take a look at the well-established Seagate Technology plc (NASDAQ:STX). The company's stock received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. 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, what if the stock is still a bargain? Let’s examine Seagate Technology’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Seagate Technology

Is Seagate Technology still cheap?

According to my valuation model, Seagate Technology seems to be fairly priced at around 6.06% above my intrinsic value, which means if you buy Seagate Technology today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $54.66, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Seagate Technology’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Seagate Technology generate?

NasdaqGS:STX Past and Future Earnings, October 30th 2019
NasdaqGS:STX Past and Future Earnings, October 30th 2019

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 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 Seagate Technology, at least in the near future.

What this means for you:

Are you a shareholder? Currently, STX 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.

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Are you a potential investor? If you’ve been keeping an eye on STX for a while, now may not be the most optimal 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. In addition to this, 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 STX should the price fluctuate below its true value.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.