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Should You Buy Zegona Communications plc (LSE:ZEG)?

Zegona Communications plc (LSE:ZEG), a diversified telecommunication services company based in United Kingdom, received a lot of attention from a substantial price movement on the LSE in the over the last few months, increasing to €1.8 at one point, and dropping to the lows of €1.62. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether ZEG's current trading price of €1.63 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ZEG’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for ZEG

Is ZEG still cheap?

Great news for investors – ZEG is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €5.36, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. ZEG’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.

Can we expect growth from ZEG?

LSE:ZEG Future Profit Oct 15th 17
LSE:ZEG Future Profit Oct 15th 17

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 ZEG future expectations. With revenues expected to grow by a double-digit 12.19% over the next couple of years, the outlook is positive for ZEG. If the level of expenses is able to be maintained, it looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since ZEG is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic 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 capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ZEG for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ZEG. 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 buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Zegona Communications. You can find everything you need to know about ZEG in the latest infographic research report. If you are no longer interested in Zegona Communications, 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.

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