What Is Shaw Communications Inc's (TSE:SJR.B) Share Price Doing?

Shaw Communications Inc (TSX:SJR.B), a media company based in Canada, saw significant share price volatility over the past couple of months on the TSX, rising to the highs of CA$29.95 and falling to the lows of CA$25.09. 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 Shaw Communications's current trading price of CA$25.09 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 Shaw Communications’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 Shaw Communications

What is Shaw Communications worth?

According to my valuation model, the stock is currently overvalued by about 20%, trading at CA$25.09 compared to my intrinsic value of CA$20.86. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Shaw Communications’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Shaw Communications?

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. 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. Shaw Communications’s earnings over the next few years are expected to increase by 30.19%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in SJR.B’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SJR.B should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SJR.B for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for SJR.B, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Shaw Communications. You can find everything you need to know about Shaw Communications in the latest infographic research report. If you are no longer interested in Shaw Communications, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.