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While Telephone and Data Systems, Inc. (NYSE:TDS) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NYSE over the last few months. The company is inching closer to its yearly highs following the recent share price climb. As a US$3.7b market-cap stock, it seems odd Telephone and Data Systems is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Telephone and Data Systems’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Telephone and Data Systems
What's The Opportunity In Telephone and Data Systems?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 14.16% above our intrinsic value, which means if you buy Telephone and Data Systems today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $29.28, there’s only an insignificant downside when the price falls to its real value. In addition to this, Telephone and Data Systems has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from Telephone and Data Systems?
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. 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 profit expected to grow by 97% over the next couple of years, the future seems bright for Telephone and Data Systems. It looks like higher cash flow 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 already priced in TDS’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 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 an eye on TDS, 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.