Should You Investigate Universal Music Group N.V. (AMS:UMG) At €27.32?

Let's talk about the popular Universal Music Group N.V. (AMS:UMG). The company's shares saw a decent share price growth of 19% on the ENXTAM over the last few months. The company is inching closer to its yearly highs following the recent share price climb. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Universal Music Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What's The Opportunity In Universal Music Group?

According to our valuation model, Universal Music Group seems to be fairly priced at around 0.3% below our intrinsic value, which means if you buy Universal Music Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth €27.40, then there’s not much of an upside to gain from mispricing. In addition to this, Universal Music Group has a low beta, which suggests its share price is less volatile than the wider market.

See our latest analysis for Universal Music Group

What kind of growth will Universal Music Group 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 a negative profit growth of -6.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Universal Music Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? UMG seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on UMG for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on UMG should the price fluctuate below its true value.

If you'd like to know more about Universal Music Group as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Universal Music Group and you'll want to know about this.

If you are no longer interested in Universal Music Group, 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.