Is It Too Late To Consider Buying Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL)?

Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SNSE over the last few months, increasing to CL$3,997 at one point, and dropping to the lows of CL$2,650. 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 Empresa Nacional de Telecomunicaciones' current trading price of CL$2,650 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 Empresa Nacional de Telecomunicaciones’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 Empresa Nacional de Telecomunicaciones

What Is Empresa Nacional de Telecomunicaciones Worth?

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. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 2.14x is currently well-below the industry average of 15.62x, meaning that it is trading at a cheaper price relative to its peers. 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 kind of growth will Empresa Nacional de Telecomunicaciones generate?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Empresa Nacional de Telecomunicaciones, at least in the near future.

What This Means For You

Are you a shareholder? Although ENTEL is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to ENTEL, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on ENTEL for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Empresa Nacional de Telecomunicaciones as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 4 warning signs for Empresa Nacional de Telecomunicaciones you should be mindful of and 2 of these make us uncomfortable.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.