A Look at Spark New Zealand’s (NZSE:SPK) Valuation Following Its New ASX Listing Announcement

Spark New Zealand (NZSE:SPK) has announced an application to list 48,750 new ordinary fully paid securities on the Australian Securities Exchange. This step broadens access for investors and signals a strategic push to enhance market presence.

See our latest analysis for Spark New Zealand.

Spark New Zealand’s decision to list new securities on the ASX arrives after a challenging stretch for shareholders, with a 1-year total return of -12.71% and a five-year total return of -24.15%. While the stock saw a quick bounce this week, broader momentum remains weighed down by an 18.64% year-to-date share price decline. This hints at lingering concerns but also possible upside as strategic changes take shape.

If you’re open to spotting other companies making moves beyond the mainstream, now’s a timely opportunity to broaden your outlook and discover fast growing stocks with high insider ownership

With shares trading at a notable discount to analyst targets and modest growth forecasts, investors face a key question: is this the right moment to buy into Spark’s recovery story, or is the market already factoring in future gains?

Price-to-Earnings of 18x: Is it justified?

With Spark New Zealand trading at a price-to-earnings (P/E) ratio of 18x and its last close at NZ$2.40, the stock appears attractively priced relative to its peer average P/E of 28.1x.

The price-to-earnings multiple shows what investors are willing to pay today for a dollar of Spark's earnings. In the telecom sector, P/E ratios help to assess whether the market believes future profit potential is strong or already priced in.

Spark’s current valuation implies the market may not fully appreciate its earnings quality, given that its P/E is well below the peer group but just above the global telecom industry average of 16.9x. Without a fair ratio available, it is unclear if this gap will close, but the discount relative to local peers stands out.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 18x (UNDERVALUED)

However, slower revenue growth and weak medium-term returns could limit Spark’s recovery if market sentiment stays cautious or if telecom competition intensifies.

Find out about the key risks to this Spark New Zealand narrative.

Another View: SWS DCF Model Suggests More Upside

Taking a different approach, our DCF model values Spark New Zealand shares at NZ$3.15, which is 23.7% above the current market price of NZ$2.40. This result may indicate that the stock is undervalued. Does this model reveal something the market is missing, or is caution still warranted?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Spark New Zealand for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Spark New Zealand Narrative

If you see the story differently or want to follow your own line of research, you have the power to piece together your own view in just a few minutes, then Do it your way

A great starting point for your Spark New Zealand research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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