We touched upon Rogers Communication (RCI.B) briefly in the number cruncher written for the Globe and Mail yesterday which focused on Canadian companies with profit growth. What’s interesting with Rogers Communication is that even though profits and EVA have been on a nice incline, the stock price disagreed and has been slipping since March 2019. This occurrence pushed up the stock’s intrinsic value above its current price for the first time in 2 years.
In addition, we can look at the future-growth-value (FGV) graph for a double confirmation as to whether or not the stock is undervalued, overvalued, or fairly valued. The FGV metric represents the proportion of the market value of the company that is made up of future growth expectations rather than the actual profit generated. The higher the percentage, the higher the baked-in premium for expected growth. Take a look at the graph below, during Q1 2019 there was a small premium factored into the stock price. In Q2 that premium disappeared, and the stock was fairly priced. And now, in Q3 – the stock was valued at a discount to its actual potential.