Stock Analysis

Is It Too Late To Consider Buying WildBrain Ltd. (TSE:WILD)?

TSX:WILD
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While WildBrain Ltd. (TSE:WILD) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the TSX, rising to highs of CA$2.93 and falling to the lows of CA$1.93. 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 WildBrain's current trading price of CA$1.96 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 WildBrain’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out the opportunities and risks within the CA Entertainment industry.

Is WildBrain Still Cheap?

According to my valuation model, WildBrain seems to be fairly priced at around 5.59% above my intrinsic value, which means if you buy WildBrain today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CA$1.86, there’s only an insignificant downside when the price falls to its real value. What's more, WildBrain’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of WildBrain look like?

earnings-and-revenue-growth
TSX:WILD Earnings and Revenue Growth November 7th 2022

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. WildBrain'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? WILD’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on WILD, 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 WildBrain at this point in time. Every company has risks, and we've spotted 1 warning sign for WildBrain you should know about.

If you are no longer interested in WildBrain, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether WildBrain is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.