What is the market’s view of SK Telecom Co’s future operating performance as reflected in the current price of $22? Over the next 6 years, SK Telecom Co shares will need to reach $36 to achieve average annual stock market performance of 9.0%. To achieve Upper quartile performance, SK Telecom Co’s stock price will need to reach $43 by 2028.
Executive Summary
- Price Target Research identifies SK Telecom Co as having: below average expected growth, below average financial strength, low profitability, and instability. A big negative influence on SK Telecom Co’s valuation is its poor Risk Profile.
- Very low valuation, above market shareholder returns. Current valuation levels are very low relative to the SK Telecom Co Peer Group. Recent market returns have outperformed the SK Telecom Co Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, SK Telecom Co shares should reach a level of $38 by 2028 — an 15.0% per year total shareholder return. A 2028 stock price of $36 would reflect median performance and a price of $43 would be required to reach upper quartile performance.
- SK Telecom Co’s historical growth is very low. Historical growth has been very low relative to the SK Telecom Co Peer Group and forecasted growth is relatively below average. Revenue Growth, Asset Growth, and Equity Growth have lagged. These factors have negatively affected market perceptions of SK Telecom Co. SK Telecom Co’s historical income statement growth has been higher than growth in the balance sheet. Revenue growth has exceeded asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. SK Telecom Co’s consensus growth expectations are lower than historical growth.
- Asset Turnover is group leading. Pretax Margin, and Return on Equity are group lagging. The company has high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- Risk Profile has been SK Telecom Co’s biggest valuation weakness. SK Telecom Co’s risk profile is very unfavorable. Overall variability has been above average with above average revenue variability, very high E.P.S. variability, and only average stock price volatility. Financial Strength is below average and earnings’ expectations are relatively high. The debt/capital ratio has risen very significantly.
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