Is it too late to consider buying Nine Entertainment Co. Holdings Limited (ASX:NEC)?

Nine Entertainment Co. Holdings Limited (ASX:NEC), may not be a large-cap stock, but it has seen decent teen-level share price growth on the ASX over the past few years. month. As a mid-cap stock with high analyst coverage, you can assume that any recent changes in the company’s outlook are already priced into the stock. However, could the stock still trade at a relatively cheap price? Today, I will analyze the most recent Nine Entertainment Holdings outlook and valuation data to see if the opportunity still exists.

Check out our latest analysis for Nine Entertainment Holdings

Is Nine Entertainment Holdings still cheap?

According to my multiple price model, which compares the company’s price-earnings ratio to the industry average, the stock price seems justified. In this case, I used the Price/Earnings (PE) ratio since there is not enough information to reliably predict the stock’s cash flow. I find that Nine Entertainment Holdings’ ratio of 12.3x trades slightly below its industry peers’ ratio of 12.81x, which means that if you buy Nine Entertainment Holdings today you will pay one reasonable price. And if you think Nine Entertainment Holdings should be trading at this level for the long term, then there’s not a lot of upside to gain over other industry peers. Also, it seems that Nine Entertainment Holdings’ stock price is quite stable, which means there may be less chance to buy low in the future now that its price is similar to of their industry peers. This is because the stock is less volatile than the broader market given its low beta.

What does the future of Nine Entertainment Holdings look like?

ASX: NEC earnings and revenue growth August 27, 2022

Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to increase 21% over the next two years, the future looks bright for Nine Entertainment Holdings. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.

What this means for you

Are you a shareholder? NEC’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 that we have not considered today, such as the financial strength of the company. Have these factors changed since the last time you consulted NEC? Will you be confident enough to invest in the company if the price drops below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on NEC, now might not be the most optimal time to buy, given that it’s trading around industry price multiples. However, the optimistic outlook is encouraging for NEC, which means it is worth digging deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind that when it comes to analyzing a stock, it is worth noting the risks involved. For example – Nine Entertainment Holdings has 1 warning sign we think you should know.

If you are no longer interested in Nine Entertainment Holdings, you can use our free platform to view our list of over 50 other stocks with high growth potential.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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