Brilliant Earth Group, Inc. (NASDAQ:BRLT), might not be a large cap stock, but it led the NASDAQGM gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Brilliant Earth Group’s outlook and valuation to see if the opportunity still exists.
Is Brilliant Earth Group Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 12.04% above our intrinsic value, which means if you buy Brilliant Earth Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $1.55, 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 Brilliant Earth Group’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.
Check out our latest analysis for Brilliant Earth Group
What kind of growth will Brilliant Earth Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Brilliant Earth Group, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Currently, BRLT 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 reduce the risk in your portfolio. Is your current exposure to the stock optimal 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 BRLT 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 BRLT should the price fluctuate below its true value.
If you'd like to know more about Brilliant Earth Group as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for Brilliant Earth Group (1 makes us a bit uncomfortable) you should be familiar with.
If you are no longer interested in Brilliant Earth Group, 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.