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Should You Think About Buying SKY Network Television Limited (NZSE:SKT) Now?

SKY Network Television Limited (NZSE:SKT), might not be a large cap stock, but it saw significant share price movement during recent months on the NZSE, rising to highs of NZ$2.68 and falling to the lows of NZ$2.40. 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 SKY Network Television's current trading price of NZ$2.52 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 SKY Network Television’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for SKY Network Television

What Is SKY Network Television Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12.93% above my intrinsic value, which means if you buy SKY Network Television today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is NZ$2.23, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since SKY Network Television’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 does the future of SKY Network Television look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of SKY Network Television, it is expected to deliver a negative earnings growth of -7.5%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? SKT seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

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Are you a potential investor? If you’ve been keeping an eye on SKT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on SKT should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing SKY Network Television at this point in time. Our analysis shows 3 warning signs for SKY Network Television (1 is a bit concerning!) and we strongly recommend you look at them before investing.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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