Should You Think About Buying Telephone and Data Systems, Inc. (NYSE:TDS) Now?
Telephone and Data Systems, Inc. (NYSE:TDS), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$17.07 and falling to the lows of US$9.88. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Telephone and Data Systems' current trading price of US$10.29 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 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.
See our latest analysis for Telephone and Data Systems
What Is Telephone and Data Systems Worth?
Good news, investors! Telephone and Data Systems is still a bargain right now. According to my valuation, the intrinsic value for the stock is $14.18, but it is currently trading at US$10.29 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Telephone and Data Systems’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
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. I recommend you think about 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.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 4 warning signs for Telephone and Data Systems (2 don't sit too well with us) you should be familiar with.
If you are no longer interested in Telephone and Data Systems, 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.
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