Data#3 Limited (ASX:DTL), might not be a large cap stock, but it saw a decent share price growth of 13% on the ASX over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Data#3’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Data#3

What Is Data#3 Worth?

According to our valuation model, Data#3 seems to be fairly priced at around 7.86% above our intrinsic value, which means if you buy Data#3 today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth A$7.71, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Data#3 has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Data#3 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. 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. With profit expected to grow by 49% over the next couple of years, the future seems bright for Data#3. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in DTL’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on DTL, now may not be the most optimal 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Data#3 has 1 warning sign we think you should be aware of.