Telesat (NasdaqGS:TSAT): Assessing Valuation After Recent Share Price Momentum

Telesat (NasdaqGS:TSAT) shares have climbed steadily in recent weeks, catching the eye of investors curious about what is fueling the momentum. With the stock up nearly 44% over the past month, performance trends are front and center.

See our latest analysis for Telesat.

Telesat’s strong 1-year total shareholder return of nearly 120% has certainly put it back on the radar. This signals renewed investor optimism after a year of relative quiet and subdued moves. With healthy momentum now building, the stock’s recent rally hints at shifting expectations and possible growth surprises ahead.

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Yet with such a rapid run-up, investors are left to wonder whether Telesat is still undervalued after this surge or if all the expected growth is now reflected in the price, leaving little room for upside.

Price-to-Sales Ratio of 1.3x: Is it Justified?

At a last close of $29.85, Telesat’s price-to-sales ratio comes in at 1.3x. This is just above the US Telecom industry average of 1.2x, suggesting the stock is trading at a slight premium to sector peers based on sales.

The price-to-sales (P/S) ratio measures how much investors are willing to pay for each dollar of revenue. For companies like Telesat, where profitability is currently out of reach, the P/S ratio is a common way to benchmark valuation against competitors, particularly in capital-intensive sectors such as telecom.

While Telesat is showing strong revenue growth expectations, the market appears to be pricing in optimism and future expansion, but perhaps without fully discounting current unprofitability. Compared to the industry, this higher P/S multiple signals that investors may be betting on Telesat outgrowing its rivals. Still, when stacked against the estimated fair P/S ratio of 1.6x, there may be some headroom for the market to recognize further upside.

Explore the SWS fair ratio for Telesat

Result: Price-to-Sales of 1.3x (ABOUT RIGHT)

However, persistent net losses and unproven profitability remain risks that could cool investor enthusiasm if growth does not translate into sustainable earnings.

Find out about the key risks to this Telesat narrative.

Build Your Own Telesat Narrative

If you want to dig deeper or have your own perspective, you can explore the data and shape your own story in just a few minutes. Do it your way

A great starting point for your Telesat research is our analysis highlighting 1 key reward 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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