Is Newsmax (NMAX) Overvalued Or Undervalued After Recent Share Price Swings

Newsmax (NMAX) has come under closer investor scrutiny after recent share price swings, with the stock last closing at $7.88. That has prompted fresh questions about how its current valuation lines up with fundamentals.

See our latest analysis for Newsmax.

The recent 1 day share price return of 1.94% comes after a much weaker 90 day share price return of a 37.81% decline, suggesting momentum has been fading even as investors reassess what the current US$7.88 level implies for growth prospects and risk.

If you are weighing up where to look next in media and beyond, this could be a good moment to broaden your search with fast growing stocks with high insider ownership.

With Newsmax trading at US$7.88, alongside an analyst price target of US$20.50 and an estimated intrinsic discount of about 60%, you have to ask: is this a genuine mispricing, or is the market already factoring in future growth?

Price-to-Sales of 5.5x: Is it justified?

On a P/S of 5.5x at a last close of US$7.88, Newsmax screens as expensive compared with both media peers and the level suggested by our models.

P/S compares the company’s market value with its revenue. This can be useful for businesses that are not yet profitable but do generate sales, such as Newsmax.

Here, the 5.5x P/S stands well above the US Media industry average of 0.9x and a peer average of just 0.2x, pointing to a much richer revenue multiple. It also sits far above the estimated fair P/S of 1.5x that our regression based fair ratio work indicates as a level the market could move toward if sentiment cools.

Explore the SWS fair ratio for Newsmax

Result: Price-to-Sales of 5.5x (OVERVALUED)

However, there are clear risks here, including Newsmax’s US$111.1m net loss and the possibility that media sector sentiment will remain cautious for longer than investors expect.

Find out about the key risks to this Newsmax narrative.

Another View: What Our DCF Model Suggests

While the 5.5x P/S ratio presents Newsmax as expensive relative to peers, our DCF model suggests the opposite, indicating the shares trade about 60% below an estimated fair value of US$19.73. That difference raises a simple question: which signal do you rely on more?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Newsmax for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 870 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Newsmax Narrative

If you look at the numbers and reach a different conclusion, or prefer to test your own view against the data, you can build a complete Newsmax story in just a few minutes with Do it your way.

A great starting point for your Newsmax research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

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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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