Yahoo Finance Is StarHub Ltd (SGX:CC3) Undervalued?
StarHub Ltd (SGX:CC3), a wireless telecom company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD2.51 and falling to the lows of SGD1.93. 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 StarHub’s current trading price of SGD1.93 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 StarHub’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for StarHub
What is StarHub worth?
According to my valuation model, StarHub seems to be fairly priced at around 17.12% below my intrinsic value, which means if you buy StarHub today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth SGD2.33, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like StarHub’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.
Can we expect growth from StarHub?
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. Though in the case of StarHub, it is expected to deliver a negative earnings growth of -11.47%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? CC3 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CC3 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CC3 should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on StarHub. You can find everything you need to know about StarHub in the latest infographic research report. If you are no longer interested in StarHub, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
