In This Article:
Seven West Media Limited (ASX:SWM), might not be a large cap stock, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$0.23 and falling to the lows of AU$0.17. 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 Seven West Media's current trading price of AU$0.18 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 Seven West Media’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Seven West Media
What Is Seven West Media Worth?
Good news, investors! Seven West Media is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Seven West Media’s ratio of 3.29x is below its peer average of 19.48x, which indicates the stock is trading at a lower price compared to the Media industry. Although, there may be another chance to buy again in the future. This is because Seven West Media’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Seven West Media 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. 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. However, with a negative profit growth of -5.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Seven West Media. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although SWM is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to SWM, or whether diversifying into another stock may be a better move for your total risk and return.