Seven West Media Limited (ASX:SWM), a media company based in Australia, received a lot of attention from a substantial price movement on the ASX in the over the last few months, increasing to A$0.85 at one point, and dropping to the lows of A$0.62. 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 SWM’s current trading price of A$0.62 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 SWM’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 Seven West Media

Is SWM still cheap?

According to my valuation model, SWM seems to be fairly priced at around 7% below my intrinsic value, which means if you buy SWM today, you’d be paying a reasonable price for it. And if you believe SWM’s true value is A$0.67, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, SWM’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for SWM to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of SWM look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 SWM future expectations. However, with an expected decline of -5.81% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for SWM. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? SWM 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 optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on SWM, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SWM for a while, now may not be the most optimal 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 SWM should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Seven West Media. You can find everything you need to know about SWM in the latest infographic research report. If you are no longer interested in Seven West Media, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.