Telephone and Data Systems Inc (NYSE:TDS), a wireless telecom company based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $29.41 at one point, and dropping to the lows of $25.03. 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 Telephone and Data Systems’s current trading price of $25.94 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Telephone and Data Systems’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Telephone and Data Systems
What’s the opportunity in Telephone and Data Systems?
Good news, investors! Telephone and Data Systems is still a bargain right now. According to my valuation, the intrinsic value for the stock is $33.51, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Telephone and Data Systems’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 Telephone and Data Systems?
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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Telephone and Data Systems, at least in the near future.
What this means for you:
Are you a shareholder? Although TDS is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to TDS, 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 an eye on TDS for a while, but hesitant on making the leap, I recommend you dig deeper 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 Telephone and Data Systems. You can find everything you need to know about Telephone and Data Systems in the latest infographic research report. If you are no longer interested in Telephone and Data Systems, 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.