SATS Ltd (SGX:S58), a infrastructure company based in Singapore, saw a double-digit share price rise of over 10% in the past couple of months on the SGX. As a mid-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? Let’s take a look at SATS’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for SATS
What is SATS worth?
The stock is currently trading at SGD5.48 on the share market, which means it is overvalued by 82% compared to my intrinsic value of SGD3.02. This means that the opportunity to buy SATS at a good price has disappeared! Another thing to keep in mind is that SATS’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will SATS generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of SATS, it is expected to deliver a relatively unexciting earnings growth of 6.94%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in SATS’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SATS 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 SATS 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 positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.