While Telephone and Data Systems, Inc. (NYSE:TDS) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. As a US$3.8b market-cap stock, it seems odd Telephone and Data Systems is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let's examine Telephone and Data Systems's valuation and outlook in more detail to determine if there's still a bargain opportunity.

Is Telephone and Data Systems Still Cheap?

According to our valuation model, Telephone and Data Systems seems to be fairly priced at around 12.20% above our intrinsic value, which means if you buy Telephone and Data Systems today, you'd be paying a relatively reasonable price for it. And if you believe the company's true value is $30.31, there's only an insignificant downside when the price falls to its real value. What's more, Telephone and Data Systems's share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Telephone and Data Systems generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. Telephone and Data Systems' earnings over the next few years are expected to increase by 97%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? TDS's optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you've been keeping tabs on TDS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Telephone and Data Systems as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Telephone and Data Systems and we think they deserve your attention.

If you are no longer interested in Telephone and Data Systems, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.