At AU$14.13, Is It Time To Put Event Hospitality & Entertainment Limited (ASX:EVT) On Your Watch List?

While Event Hospitality & Entertainment Limited (ASX:EVT) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the ASX, rising to highs of AU$15.34 and falling to the lows of AU$13.51. 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 Event Hospitality & Entertainment's current trading price of AU$14.13 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 Event Hospitality & Entertainment’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 Event Hospitality & Entertainment

What is Event Hospitality & Entertainment worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15% below my intrinsic value, which means if you buy Event Hospitality & Entertainment today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$16.61, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Event Hospitality & Entertainment’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Event Hospitality & Entertainment look like?

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. Event Hospitality & Entertainment's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? EVT’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 track record of its management team. 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 EVT, 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.

So while earnings quality is important, it's equally important to consider the risks facing Event Hospitality & Entertainment at this point in time. In terms of investment risks, we've identified 1 warning sign with Event Hospitality & Entertainment, and understanding it should be part of your investment process.

If you are no longer interested in Event Hospitality & Entertainment, 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.