At AU$31.46, Is IDP Education Limited (ASX:IEL) Worth Looking At Closely?

IDP Education Limited (ASX:IEL), is not the largest company out there, but it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$39.55 at one point, and dropping to the lows of AU$31.46. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether IDP Education's current trading price of AU$31.46 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at IDP Education’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for IDP Education

What is IDP Education worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.01% above my intrinsic value, which means if you buy IDP Education today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is A$29.96, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, IDP Education’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from IDP Education?

earnings-and-revenue-growth

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. IDP Education's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in IEL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 an eye on IEL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 2 warning signs for IDP Education and we think they deserve your attention.

If you are no longer interested in IDP Education, 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.