Stagwell (STGW) has drawn fresh attention after announcing that SPORT BEACH will become a dedicated business unit focused on connecting athletes, brands, and creatives in sports marketing, with global expansion and high profile partners.

The SPORT BEACH announcement comes as Stagwell’s share price return has been strong in the short term, with a 7 day share price return of 17.99% and a year to date share price return of 38.69%. By contrast, the 1 year total shareholder return is broadly flat at 0.46% and the 3 year total shareholder return is a modest 4.79% decline. Together, these figures point to improving recent momentum alongside a more mixed longer term experience.

If this kind of sports and media story has your attention, it could be a good moment to broaden your search with fast growing stocks with high insider ownership.

With Stagwell valued at an intrinsic discount of about 87% and trading roughly 26% below the average analyst price target, the question is whether this is a genuine opening or whether the market is already pricing in SPORT BEACH growth.

Most Popular Narrative: 16% Undervalued

Compared with Stagwell’s last close at US$6.56, the most followed narrative anchors on a higher fair value estimate of US$7.81, built using detailed growth and profitability assumptions.

Expansion and integration of proprietary digital and martech platforms (such as Code and Ink, and the "machine") are creating higher-margin, recurring revenue streams and improving operational efficiencies, which should drive net margin expansion.

Curious what kind of revenue mix and margin shift could underpin that higher value. The narrative leans heavily on recurring software economics and a future earnings multiple that undercuts many media peers. Want to see exactly which long term growth and margin assumptions are doing the heavy lifting here.

Result: Fair Value of US$7.81 (UNDERVALUED)

However, this depends on successful execution, as heavy exposure to a handful of mega tech clients and ongoing acquisition integration work could both quickly change the narrative.

Another View: Expensive On Earnings

The narrative you just read leans on future cash flows and implied upside, but today’s earnings based yardstick tells a tougher story. Stagwell trades on a P/E of 84.1x, compared with 14.4x for the US Media industry, 21.8x for peers, and a fair ratio of 27.3x.

That gap suggests the market is already paying a rich price for each dollar of current earnings, even though our model points to a lower ratio the market could move towards over time, so you have to ask yourself how confident you are that earnings will catch up to that optimism.

Build Your Own Stagwell Narrative

If you are not convinced by these views or simply prefer to piece together your own, you can build a tailored thesis in just a few minutes with Do it your way.

A great starting point for your Stagwell research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Stagwell is on your radar, do not stop there. The real edge comes from comparing it with a wider set of ideas filtered for what matters to you.

• Zero in on potential bargains by scanning these 867 undervalued stocks based on cash flows that currently trade below what their cash flows may justify.
• Ride the AI momentum by checking out these 24 AI penny stocks that are building their businesses around artificial intelligence and data driven products.
• Strengthen your income options by reviewing these 12 dividend stocks with yields > 3% that focus on meaningful yields above 3%.

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.