Should You Investigate Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL) At CL$3,105?

While Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL) might not be the most widely known stock at the moment, 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, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Empresa Nacional de Telecomunicaciones’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Empresa Nacional de Telecomunicaciones

What's the opportunity in Empresa Nacional de Telecomunicaciones?

Great news for investors – Empresa Nacional de Telecomunicaciones is still trading at a fairly cheap price according to my price multiple model, where I compare 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 12.51x is below its peer average of 18.87x, 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. 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. With profit expected to more than double 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 a positive 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 strength of its balance sheet, in order to make a well-informed investment decision.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 2 warning signs for Empresa Nacional de Telecomunicaciones you should be aware of.

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.

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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.