ASX Stocks That May Be Trading Below Fair Value Including Aussie Broadband
In This Article:
The Australian market remained flat over the last week, but it has risen 15% over the past 12 months with earnings expected to grow by 12% per annum over the next few years. In this environment, identifying undervalued stocks like Aussie Broadband can offer potential opportunities for investors looking to capitalize on future growth.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Duratec (ASX:DUR) | A$1.42 | A$2.59 | 45.3% |
| Medibank Private (ASX:MPL) | A$3.60 | A$6.48 | 44.5% |
| Genesis Minerals (ASX:GMD) | A$2.10 | A$3.95 | 46.9% |
| Megaport (ASX:MP1) | A$7.04 | A$13.49 | 47.8% |
| Ingenia Communities Group (ASX:INA) | A$5.08 | A$9.36 | 45.7% |
| Charter Hall Group (ASX:CHC) | A$15.89 | A$29.20 | 45.6% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Aussie Broadband (ASX:ABB) | A$3.75 | A$6.74 | 44.4% |
| Superloop (ASX:SLC) | A$1.705 | A$3.31 | 48.5% |
| Coast Entertainment Holdings (ASX:CEH) | A$0.43 | A$0.77 | 44.3% |
Let's explore several standout options from the results in the screener.
Aussie Broadband
Overview: Aussie Broadband Limited (ASX:ABB) provides telecommunications and technology services in Australia, with a market cap of A$1.11 billion.
Operations: Aussie Broadband's revenue segments include Business (A$96.97 million), Wholesale (A$159.73 million), Residential (A$585.07 million), Symbio Group (A$69.93 million), and Enterprise and Government (A$88.04 million).
Estimated Discount To Fair Value: 44.4%
Aussie Broadband appears undervalued based on cash flows, trading at A$3.75, which is 44.4% below its estimated fair value of A$6.74. The company reported strong financial performance with revenue nearing A$1 billion and net income of A$26.38 million for the fiscal year ending June 30, 2024. Despite shareholder dilution over the past year and a low forecasted return on equity (11.4%), earnings are projected to grow significantly at 27.3% annually, outpacing market expectations.
PolyNovo
Overview: PolyNovo Limited designs, manufactures, and sells biodegradable medical devices in the United States, Australia, New Zealand, and internationally with a market cap of A$1.76 billion.
Operations: PolyNovo's revenue from the development, manufacturing, and commercialization of NovoSorb Technology totals A$103.23 million.
Estimated Discount To Fair Value: 16.5%
PolyNovo appears undervalued, trading at A$2.56, below its estimated fair value of A$3.07. The company reported a strong turnaround with net income of A$5.26 million for the fiscal year ending June 30, 2024, compared to a net loss last year. Earnings are forecast to grow significantly at 38.3% annually over the next three years, outpacing market expectations and reflecting robust future cash flows despite slower revenue growth and recent insider selling activity.