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Fundamental Value Perspective: DIRECTV (NASDAQ:DTV)
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We look at DIRECTV (NASDAQ:DTV) a company in the CATV Systems industry currently at the attention of investors, to assess if it provides value for investors considering buying or selling it. Currently DIRECTV is trading at $87.51 after moving down -0.37% in the previous day of trading.
DTV [Trend Analysis] is trading with a trailing 12 month P/E multiple of 43.95 and an estimated forward P/E multiple of 16.15. The stock has an estimated 5 year annual growth of 2.76% and a PEG multiple of 14.12.
Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if DIRECTV is potentially a value buy for investors, the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the company rather than merely the growth for one earnings period ahead as forward P/E does.
That is to say, P/E simply doesn’t account for the long term prospects of DTV. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of DTV being 14.12, we consider DIRECTV to likely be overpriced.
This analysis means that value buyers who do not currently hold DIRECTV (NASDAQ:DTV) should not consider buying and investors currently holding the stock should consider selling.
The mean analyst 12 month target price for DIRECTV (NASDAQ:DTV) is currently $93.40 or 6.73% above the current price. Additionally, the stock has been as high as $89.46 and as low as $71.88 in the last 52 weeks. Analysts are estimating that DTV will report earnings per share of $1.65 next quarter.