In This Article:
Tabcorp Holdings Limited (ASX:TAH), a hospitality 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$5.53 at one point, and dropping to the lows of A$4.33. 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 Tabcorp Holdings’s current trading price of A$4.39 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tabcorp Holdings’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 Tabcorp Holdings
What’s the opportunity in Tabcorp Holdings?
According to my valuation model, Tabcorp Holdings seems to be fairly priced at around 6.11% below my intrinsic value, which means if you buy Tabcorp Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth A$4.68, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like Tabcorp Holdings’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Tabcorp Holdings generate?
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 the company’s future expectations. With revenue expected to more than double in the next few years, the future appears to be extremely bright for Tabcorp Holdings. If expenses can also be maintained, 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? TAH’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?