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Let's talk about the popular Universal Music Group N.V. (AMS:UMG). The company's shares saw a significant share price rise of 23% in the past couple of months on the ENXTAM. The recent share price gains has brought the company back closer to its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Universal Music Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Universal Music Group
Is Universal Music Group Still Cheap?
According to our valuation model, Universal Music Group seems to be fairly priced at around 4.98% above our intrinsic value, which means if you buy Universal Music Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €25.70, there’s only an insignificant downside when the price falls to its real value. In addition to this, Universal Music Group has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from Universal Music Group?
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. Universal Music Group's earnings over the next few years are expected to increase by 21%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? UMG’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 confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on UMG, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.