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Is It Time To Consider Buying Tabcorp Holdings Limited (ASX:TAH)?

While Tabcorp Holdings Limited (ASX:TAH) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the ASX over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Tabcorp Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Tabcorp Holdings

Is Tabcorp Holdings Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.2% below my intrinsic value, which means if you buy Tabcorp Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$1.06, then there’s not much of an upside to gain from mispricing. What's more, Tabcorp Holdings’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Tabcorp Holdings?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. However, with a relatively muted revenue growth of 9.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Tabcorp Holdings, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in TAH’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on TAH, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 1 warning sign for Tabcorp Holdings and you'll want to know about it.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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