In today's market finding value opportunities are becoming more and more scarce. Discovery Communications' stock price has dropped significantly since reaching an intraday high of $46.38 on December 30th, 2013.
DISCA stock price from Yahoo! Finance
Now trading at $25.58, is Discovery Communications (DISCA) an opportunity or a trap?
Analyzing the company's fundamentals we find many core strengths including both historical as well as prospective earnings and cashflow. There are, however, some concerns. In particular, Discovery's margins appear to be coming under pressure. I find Discovery to be a compelling opportunity in an otherwise overpriced market. I believe margin contraction has ended and the margins are settling. The shares are oversold provide a hefty margin of safety. But first, let's begin with a brief overview of the company.
