Today we're going to take a look at the well-established Duolingo, Inc. (NASDAQ:DUOL). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$441 at one point, and dropping to the lows of US$272. 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 Duolingo's current trading price of US$297 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Duolingo’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Is Duolingo Still Cheap?

Great news for investors – Duolingo is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $459.71, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Duolingo’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Check out our latest analysis for Duolingo

What does the future of Duolingo look like?

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. Duolingo'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? Since DUOL is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on DUOL for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DUOL. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Duolingo at this point in time. Case in point: We've spotted 1 warning sign for Duolingo you should be aware of.

If you are no longer interested in Duolingo, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.