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Today we're going to take a look at the well-established Take-Two Interactive Software, Inc. (NASDAQ:TTWO). The company's stock saw a decent share price growth of 13% on the NASDAQGS over the last few months. The company is inching closer to its yearly highs following the recent share price climb. 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, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Take-Two Interactive Software’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Take-Two Interactive Software
What Is Take-Two Interactive Software Worth?
According to our valuation model, Take-Two Interactive Software seems to be fairly priced at around 3.86% above our intrinsic value, which means if you buy Take-Two Interactive Software today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $194.43, there’s only an insignificant downside when the price falls to its real value. Furthermore, Take-Two Interactive Software’s low beta implies that the stock is less volatile than the wider market.
What does the future of Take-Two Interactive Software look like?
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. In Take-Two Interactive Software's case, its revenues over the next few years are expected to grow by 52%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in TTWO’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 an eye on TTWO, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.