Yahoo Finance What Is Telephone and Data Systems, Inc.'s (NYSE:TDS) Share Price Doing?
Telephone and Data Systems, Inc. (NYSE:TDS), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Telephone and Data Systems’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Telephone and Data Systems
What Is Telephone and Data Systems Worth?
Telephone and Data Systems appears to be overvalued by 34% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$18.77 on the market compared to our intrinsic value of $14.00. Not the best news for investors looking to buy! Furthermore, Telephone and Data Systems’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.
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. 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. Telephone and Data Systems' earnings over the next few years are expected to increase by 97%, 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? It seems like the market has well and truly priced in TDS’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TDS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TDS for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for TDS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Telephone and Data Systems as a business, it's important to be aware of any risks it's facing. For example - Telephone and Data Systems has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.