Frontier Communications Corporation (NASDAQ:FTR), a telecom company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NasdaqGS. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Frontier Communications’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Frontier Communications
What’s the opportunity in Frontier Communications?
Good news, investors! Frontier Communications is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $59.5, but it is currently trading at US$9.22 on the share market, meaning that there is still an opportunity to buy now. Frontier Communications’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of Frontier Communications look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Frontier Communications’s earnings over the next few years are expected to increase by 73.08%, 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? Since FTR is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on FTR for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FTR. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.