Event Hospitality & Entertainment Limited (ASX:EVT), a media company based in Australia, saw significant share price volatility over the past couple of months on the ASX, rising to the highs of $13.48 and falling to the lows of $12.09. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether EVT's current trading price of $12.51 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 EVT’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 Event Hospitality & Entertainment
What is EVT worth?
According to my valuation model, the stock is currently overvalued by about 37%, trading at $12.51 compared to my intrinsic value of $7.94. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like EVT’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because EVT’s stock is less volatile than the wider market given its low beta.
Can we expect growth from EVT?
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 26.48% over the next couple of years, the future seems bright for EVT. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in EVT’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe EVT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on EVT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for EVT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.