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Nine Entertainment Co. Holdings Limited (ASX:NEC), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the ASX. 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? Let’s examine Nine Entertainment Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Nine Entertainment Holdings still cheap?
According to my valuation model, Nine Entertainment Holdings seems to be fairly priced at around 0.19% above my intrinsic value, which means if you buy Nine Entertainment Holdings today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is A$2.63, there’s only an insignificant downside when the price falls to its real value. In addition to this, Nine Entertainment Holdings has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Nine Entertainment Holdings generate?
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. Nine Entertainment 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? NEC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on NEC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
It can be quite valuable to consider what analysts expect for Nine Entertainment Holdings from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.
If you are no longer interested in Nine Entertainment 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.
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