Is it time to consider buying Yellow Pages Limited (TSE:Y)?

Although Yellow Pages Limited (TSE:Y) may not be the best-known stock right now, it has garnered a lot of attention due to a substantial price movement on the TSX over the past last few months, rising to CA$14.46 at one point, and falling as low as CA$12.80. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. One question to answer is does the current Yellow Pages price of C$13.70 reflect the true value of small caps? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at the outlook and value of the Yellow Pages based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for the Yellow Pages

What is the opportunity in the Yellow Pages?

Good news, investors! Yellow Pages 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. I used the price/earnings ratio in this case because there is not enough visibility to predict its cash flow. The stock’s ratio of 5.06x is currently well below the industry average of 34.27x, meaning it is trading at a lower price than its peers. Another thing to keep in mind is that the Yellow Pages stock price is quite stable compared to the rest of the market, as indicated by its low beta. This means that if you think the current stock price should move closer to its industry peers, a low beta could suggest that it is unlikely to reach that level anytime soon, and once there will be, it can be difficult to fall back into an attractive purchase. worn again.

What kind of growth will the Yellow Pages generate?

earnings-and-revenue-growth

Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. Buying a big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with an expected -18% decline in revenue over the next two years, near-term growth certainly does not appear to be a driver for a buying decision for Yellow Pages. This certainty tilts the risk-reward scale toward higher risk.

What does this mean to you :

Are you a shareholder? Although Y is currently trading below the sector’s PE ratio, the unfavorable outlook of negative growth carries a degree of risk. Consider whether you want to increase your portfolio’s exposure to Y, or whether diversifying into another stock may be a better decision for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on Y for a while, but are hesitant to take the plunge, I recommend doing some more in-depth research on 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.

With this in mind, we would not consider investing in a stock unless we have a thorough understanding of the risks. For example – Yellow Pages has 2 warning signs we think you should know.

If you are no longer interested in the Yellow Pages, 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.

Calvin W. Soper