When Should You Buy Zee Entertainment Enterprises Limited (NSE:ZEEL)?

Zee Entertainment Enterprises Limited (NSE:ZEEL), is not the largest company out there, but it saw significant share price movement during recent months on the NSEI, rising to highs of ₹230 and falling to the lows of ₹182. 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 Zee Entertainment Enterprises' current trading price of ₹197 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 Zee Entertainment Enterprises’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 Zee Entertainment Enterprises

What's the opportunity in Zee Entertainment Enterprises?

According to my valuation model, Zee Entertainment Enterprises seems to be fairly priced at around 12.67% above my intrinsic value, which means if you buy Zee Entertainment Enterprises today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ₹174.45, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Zee Entertainment Enterprises has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Zee Entertainment Enterprises?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Zee Entertainment Enterprises' 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? ZEEL’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 financial strength of the company. 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 ZEEL, 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 1 warning sign for Zee Entertainment Enterprises 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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