SKY Network Television Limited (NZSE:SKT), a media company based in New Zealand, saw significant share price volatility over the past couple of months on the NZSE, rising to the highs of NZ$2.91 and falling to the lows of NZ$2.11. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether SKY Network Television's current trading price of NZ$2.29 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 SKY Network Television’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for SKY Network Television
What's the opportunity in SKY Network Television?Great news for investors – SKY Network Television is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is NZ$3.1, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, SKY Network Television’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will SKY Network Television generate?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. Though in the case of SKY Network Television, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although SKT is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to SKT, 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 tabs on SKT for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on SKY Network Television. You can find everything you need to know about SKY Network Television in the latest infographic research report. If you are no longer interested in SKY Network Television, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.