Should You Think About Buying Tencent Music Entertainment Group (NYSE:TME) Now?

Let's talk about the popular Tencent Music Entertainment Group (NYSE:TME). The company's shares led the NYSE gainers with a relatively large price hike in the past couple of weeks. The company is now trading at yearly-high levels following the recent surge in its share price. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Tencent Music Entertainment Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Tencent Music Entertainment Group

Is Tencent Music Entertainment Group Still Cheap?

According to our valuation model, Tencent Music Entertainment Group seems to be fairly priced at around 0.8% below our intrinsic value, which means if you buy Tencent Music Entertainment Group today, you’d be paying a fair price for it. And if you believe the company’s true value is $11.74, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Tencent Music Entertainment Group’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Tencent Music Entertainment Group generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 grow by 65% over the next couple of years, the future seems bright for Tencent Music Entertainment Group. 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? TME’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on TME, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

Diving deeper into the forecasts for Tencent Music Entertainment Group mentioned earlier will help you understand how analysts view the stock going forward. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Tencent Music Entertainment 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.