Should You Buy Zee Entertainment Enterprises Limited (NSE:ZEEL) At INR580.55?
Zee Entertainment Enterprises Limited (NSEI:ZEEL), a media company based in India, saw a decent share price growth in the teens level on the NSEI 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, what if the stock is still a bargain? Let’s examine Zee Entertainment Enterprises’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Zee Entertainment Enterprises
Is Zee Entertainment Enterprises still cheap?
Great news for investors – Zee Entertainment Enterprises is still trading at a fairly cheap price. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Zee Entertainment Enterprises’s ratio of 21.37x is below its peer average of 28.3x, which suggests the stock is undervalued compared to the media industry. Zee Entertainment Enterprises’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.
What kind of growth will Zee Entertainment Enterprises 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. However, with a negative profit growth of -19.72% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Zee Entertainment Enterprises. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although Zee Entertainment Enterprises is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to Zee Entertainment Enterprises, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on Zee Entertainment Enterprises for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Zee Entertainment Enterprises. You can find everything you need to know about Zee Entertainment Enterprises in the latest infographic research report. If you are no longer interested in Zee Entertainment Enterprises, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
