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When Should You Buy Tabcorp Holdings Limited (ASX:TAH)?

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·3 min read
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While Tabcorp Holdings Limited (ASX:TAH) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the ASX over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Tabcorp Holdings’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Tabcorp Holdings

What is Tabcorp Holdings worth?

The stock is currently trading at AU$5.08 on the share market, which means it is overvalued by 22% compared to my intrinsic value of A$4.15. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Tabcorp Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Tabcorp Holdings generate?

earnings-and-revenue-growth
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. Tabcorp 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 well and truly priced in TAH’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TAH should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on TAH for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for TAH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Tabcorp Holdings, you'd also look into what risks it is currently facing. For example - Tabcorp Holdings has 2 warning signs we think you should be aware of.

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

This article by Simply Wall St is general in nature. 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.

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