Why Iridium Communications Inc. (NASDAQ:IRDM) Could Be Worth Watching

By
Simply Wall St
Published
December 24, 2021
NasdaqGS:IRDM
Source: Shutterstock

Iridium Communications Inc. (NASDAQ:IRDM), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a mid-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 Iridium Communications’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Iridium Communications

What is Iridium Communications worth?

Good news, investors! Iridium Communications is still a bargain right now. According to my valuation, the intrinsic value for the stock is $57.39, but it is currently trading at US$42.29 on the share market, meaning that there is still an opportunity to buy now. However, given that Iridium Communications’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Iridium Communications look like?

earnings-and-revenue-growth
NasdaqGS:IRDM Earnings and Revenue Growth December 24th 2021

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. Iridium Communications' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since IRDM is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on IRDM for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy IRDM. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

So while earnings quality is important, it's equally important to consider the risks facing Iridium Communications at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Iridium Communications.

If you are no longer interested in Iridium Communications, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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