NZME Limited (NZSE:NZM), which is in the media business, and is based in New Zealand, saw significant share price movement during recent months on the NZSE, rising to highs of NZ$0.58 and falling to the lows of NZ$0.45. 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 NZME's current trading price of NZ$0.45 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at NZME's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for NZME
Good news, investors! NZME is still a bargain right now. I've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 9.53x is currently well-below the industry average of 14.69x, meaning that it is trading at a cheaper price relative to its peers. NZME's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range.
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. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 40% over the next couple of years, the future seems bright for NZME. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
Are you a shareholder? Since NZM is currently undervalued, it may be a great time to increase 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 NZM for a while, now might be the time to make a leap. Its prosperous future outlook isn't fully reflected in the current share price yet, which means it's not too late to buy NZM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters - the fundamentals - before you make a decision on NZME. You can find everything you need to know about NZME in the latest infographic research report. If you are no longer interested in NZME, you can use our free platform to see my list of over 50 other stocks with a high growth potential.