Graham Holdings Company (NYSE:GHC), is not the largest company out there, but it saw a significant share price rise of 21% in the past couple of months on the NYSE. The company is now trading at yearly-high levels following the recent surge in its share price. As a US$4.1b market-cap stock, it seems odd Graham Holdings is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Graham Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Graham Holdings

Is Graham Holdings Still Cheap?

According to our valuation model, Graham Holdings seems to be fairly priced at around 13% below our intrinsic value, which means if you buy Graham Holdings today, you’d be paying a fair price for it. And if you believe the company’s true value is $1089.05, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Graham Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Graham Holdings look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Graham Holdings' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust 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 GHC’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on GHC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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 while earnings quality is important, it's equally important to consider the risks facing Graham Holdings at this point in time. Case in point: We've spotted 3 warning signs for Graham Holdings you should be mindful of and 1 of them makes us a bit uncomfortable.

If you are no longer interested in Graham Holdings, 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.