While SATS Ltd. (SGX:S58) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the SGX over the last few months. The company is inching closer to its yearly highs following the recent share price climb. 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. But what if there is still an opportunity to buy? Let’s examine SATS’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

What's The Opportunity In SATS?

According to our valuation model, SATS seems to be fairly priced at around 8.92% above our intrinsic value, which means if you buy SATS today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is SGD3.54, there’s only an insignificant downside when the price falls to its real value. What's more, SATS’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will SATS generate?

SGX:S58 Earnings and Revenue Growth November 25th 2024

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. SATS' earnings over the next few years are expected to increase by 79%, 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 already priced in S58’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on S58, 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.