SKY Network Television Limited (NZSE:SKT), might not be a large cap stock, but it saw significant share price movement during recent months on the NZSE, rising to highs of NZ$0.18 and falling to the lows of NZ$0.17. 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 SKY Network Television's current trading price of NZ$0.17 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.
View our latest analysis for SKY Network Television
What is SKY Network Television worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% below my intrinsic value, which means if you buy SKY Network Television today, you’d be paying a fair price for it. And if you believe that the stock is really worth NZ$0.20, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, SKY Network Television’s low beta implies that the stock is less volatile than the wider market.
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. 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 an expected decline of -5.6% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for SKY Network Television. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, SKT appears to be trading around its fair value, 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 tabs on SKT for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems 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 gel your views on SKT should the price fluctuate below its true value.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 1 warning sign for SKY Network Television you should be aware of.
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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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About NZSE:SKT
SKY Network Television
An entertainment company, provides sport and entertainment media services, and telecommunications services in New Zealand and internationally.
Flawless balance sheet, undervalued and pays a dividend.
