At €0.77, Is RCS MediaGroup S.p.A. (BIT:RCS) Worth Looking At Closely?

RCS MediaGroup S.p.A. (BIT:RCS), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the BIT. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at RCS MediaGroup’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for RCS MediaGroup

Is RCS MediaGroup Still Cheap?

Great news for investors – RCS MediaGroup 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 RCS MediaGroup’s ratio of 8x is below its peer average of 15.2x, which indicates the stock is trading at a lower price compared to the Media industry. What’s more interesting is that, RCS MediaGroup’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from RCS MediaGroup?

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. However, with a relatively muted revenue growth of 1.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for RCS MediaGroup, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since RCS is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on RCS for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy RCS. 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To help with this, we've discovered 3 warning signs (1 doesn't sit too well with us!) that you ought to be aware of before buying any shares in RCS MediaGroup.

If you are no longer interested in RCS MediaGroup, 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.