When Should You Buy Event Hospitality & Entertainment Limited (ASX:EVT)?

By
Simply Wall St
Published
October 18, 2021
ASX:EVT
Source: Shutterstock

Event Hospitality & Entertainment Limited (ASX:EVT), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the ASX. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Event Hospitality & Entertainment’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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 9.5% below my intrinsic value, which means if you buy Event Hospitality & Entertainment today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth A$17.23, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Event Hospitality & Entertainment’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

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

earnings-and-revenue-growth
ASX:EVT Earnings and Revenue Growth October 19th 2021

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. In Event Hospitality & Entertainment's case, its revenues over the next couple of years are expected to double, indicating an incredibly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in EVT’s positive outlook, 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 diving deeper into 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. For example - Event Hospitality & Entertainment has 2 warning signs we think you should be aware of.

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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