GTN Limited (ASX:GTN), is not the largest company out there, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$0.59 and falling to the lows of AU$0.40. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether GTN's current trading price of AU$0.40 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at GTN’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 GTN

What's the opportunity in GTN?

GTN appears to be overvalued by 26% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$0.40 on the market compared to my intrinsic value of A$0.31. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that GTN’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of GTN look like?

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. With revenues expected to grow by a double-digit 30% over the next couple of years, the outlook is positive for GTN. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in GTN’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 GTN 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 GTN 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 GTN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing GTN at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of GTN.

If you are no longer interested in GTN, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. 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.

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