At CL$3,750, Is It Time To Put Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL) On Your Watch List?

Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SNSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Empresa Nacional de Telecomunicaciones’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Empresa Nacional de Telecomunicaciones

Is Empresa Nacional de Telecomunicaciones still cheap?

Good news, investors! Empresa Nacional de Telecomunicaciones is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Empresa Nacional de Telecomunicaciones’s ratio of 9.11x is below its peer average of 15.78x, which indicates the stock is trading at a lower price compared to the Wireless Telecom industry. Although, there may be another chance to buy again in the future. This is because Empresa Nacional de Telecomunicaciones’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 Empresa Nacional de Telecomunicaciones look like?

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. With profit expected to grow by 21% over the next couple of years, the future seems bright for Empresa Nacional de Telecomunicaciones. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since ENTEL is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on ENTEL for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ENTEL. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you want to dive deeper into Empresa Nacional de Telecomunicaciones, you'd also look into what risks it is currently facing. For example, Empresa Nacional de Telecomunicaciones has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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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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