Is There Now An Opportunity In Mobile Telecommunications Company Saudi Arabia (TADAWUL:7030)?

Mobile Telecommunications Company Saudi Arabia (TADAWUL:7030), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SASE over the last few months, increasing to ر.س17.69 at one point, and dropping to the lows of ر.س12.18. 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 Mobile Telecommunications Company Saudi Arabia's current trading price of ر.س13.36 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mobile Telecommunications Company Saudi Arabia’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 Mobile Telecommunications Company Saudi Arabia

What is Mobile Telecommunications Company Saudi Arabia worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Mobile Telecommunications Company Saudi Arabia’s ratio of 18.22x is trading slightly above its industry peers’ ratio of 15.87x, which means if you buy Mobile Telecommunications Company Saudi Arabia today, you’d be paying a relatively sensible price for it. And if you believe Mobile Telecommunications Company Saudi Arabia should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like Mobile Telecommunications Company Saudi Arabia’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Mobile Telecommunications Company Saudi Arabia 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. With profit expected to more than double over the next couple of years, the future seems bright for Mobile Telecommunications Company Saudi Arabia. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? 7030’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at 7030? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on 7030, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 7030, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 5 warning signs for Mobile Telecommunications Company Saudi Arabia (2 are a bit unpleasant) you should be familiar with.

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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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