Gogo Inc. (NASDAQ:GOGO), isn’t the biggest company in the market, but it has led the NASDAQGS winners with a relatively large price rise over the past two weeks. With many analysts covering mid-cap stocks, we can expect any price-sensitive announcements to have already factored into the stock price. But what if there is still an opportunity to buy? Let’s take a closer look at Gogo’s valuation and outlook to see if there’s still a bargain opportunity.
See our latest analysis for Gogo
What is Gogo worth?
Good news, investors! Gogo is still a good deal right now according to my multiple price model, which compares the company’s price-to-earnings ratio to the industry average. In this case, I used the Price/Earnings (PE) ratio since there is not enough information to reliably predict the stock’s cash flow. I find Gogo’s ratio of 12.26x to be below its average of 24.07x, indicating that the stock is trading at a lower price than the wireless industry. However, since Gogo’s share is quite volatile (i.e. its price movements are amplified relative to the rest of the market), this could mean that the price may drop, giving us another chance to go. to buy in the future. This is based on its high beta, which is a good indicator of stock price volatility.
What does Gogo’s future look like?
Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. However, with extremely negative double-digit earnings change expected over the next two years, near-term growth is certainly not a buy decision driver. It looks like a lot of uncertainty is on the cards for Gogo, at least for the foreseeable future.
What does this mean to you :
Are you a shareholder? Although GOGO is currently trading below the industry PE ratio, the negative earnings outlook brings some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio’s exposure to GOGO or whether diversifying into another stock might be a better decision for your total risk and return.
Are you a potential investor? If you’ve been keeping your eye on GOGO for a while, but are hesitant to take the plunge, I recommend digging deeper into the stock. Given its current price multiple, now is the perfect time to make a decision. But keep in mind the risks that come with a negative growth outlook going forward.
In light of this, if you want to do more analysis on the company, it is essential to be aware of the risks involved. Know that Gogo is displayed 7 warning signs in our investment analysis and 4 of them are a little unpleasant…
If you are no longer interested in Gogo, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.