Why World Wrestling Entertainment, Inc. (NYSE: WWE) is worth watching

World Wrestling Entertainment (NYSE: WWE), may not be a large-cap stock, but it has gained more than 10% by double digits on the New York Stock Exchange over the past few months. As a mid-cap stock highly followed by analysts, you can assume any recent changes in the company’s outlook are factored into the stock. But what if the stock is still cheap? Today I’m going to analyze the latest data on WWE’s outlook and valuation to see if the opportunity still exists.

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Is World Wrestling Entertainment still cheap?

Comparing the company’s P/E to the industry average, the stock price seems reasonable based on my price multiple model. In this case, I used a price-to-earnings ratio because there wasn’t enough visibility to forecast its cash flow. Currently, the stock trades at a slightly higher price-to-earnings ratio of 25.39 than its peers’ price-to-earnings ratio of 24.14, which means that if you buy World Wrestling Entertainment today, you’ll be paying a relatively reasonable price. If you think World Wrestling Entertainment should trade at this level in the long run, there should only be one fairly insignificant headwind compared to its other industry peers. However, there may be an opportunity to buy in the future. That’s because World Wrestling Entertainment’s beta (a measure of stock price volatility) is high, which means its price movements are exaggerated relative to the rest of the market. If the market is bearish, the company’s stock price could fall more than the rest of the market, providing a great buying opportunity.

Can we expect growth in World Wrestling Entertainment?

Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. While value investors will argue that intrinsic value relative to price is what counts, a more attractive investment thesis would be high growth potential at a low price. With profits expected to grow 20% over the next few years, World Wrestling Entertainment’s future looks bright. It looks like the stock’s cash flow will be higher, which should lead to a higher stock valuation.

what does this mean to you

Are you a shareholder? WWE’s optimistic future growth appears to be factored into the current share price, which trades around industry price multiples. However, there are also important factors that we do not consider today, such as the financial strength of the company. Have any of these factors changed since you last watched WWE? Are you confident enough to invest in the company if the share price falls below the industry P/E ratio?

Are you a potential investor? If you’ve been following WWE, now might not be the best time to buy as it trades at industry multiples. However, the bullish forecast is encouraging for WWE, which means it’s worth looking into other factors, such as the strength of its balance sheet, to take advantage of the next price dip.

Given this, understanding the risks involved is critical if you want to do more analysis of your company.In Simple Wall Street, we find 1 Warning Sign for World Wrestling Entertainment We think they deserve your attention.

If you are no longer interested in World Wrestling Entertainment, you can use our free platform to see our end list 50 other stocks with high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based solely on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to provide financial advice. It does not constitute advice to buy or sell any stock and does not take into account your objectives or your financial situation. Our goal is to bring you long-term focused analytics driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Wall Street has no positions in any of the stocks mentioned.