Yahoo Finance Should You Investigate Southern Cross Media Group Limited (ASX:SXL) At AU$0.13?
Southern Cross Media Group Limited (ASX:SXL), which is in the media business, and is based in Australia, saw a double-digit share price rise of over 10% in the past couple of months on the ASX. As a 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 Southern Cross Media Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Southern Cross Media Group
What's the opportunity in Southern Cross Media Group?
Good news, investors! Southern Cross Media Group is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Southern Cross Media Group’s ratio of 2.05x is below its peer average of 15.76x, which indicates the stock is trading at a lower price compared to the Media industry. What’s more interesting is that, Southern Cross Media Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Southern Cross Media 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. However, with a negative profit growth of -14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Southern Cross Media Group. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although SXL is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to SXL, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on SXL for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Southern Cross Media Group. You can find everything you need to know about Southern Cross Media Group in the latest infographic research report. If you are no longer interested in Southern Cross Media Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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