Is It Too Late To Consider Millicom International Cellular (TIGO) After Its 1-Year Surge?

• Investors may be wondering whether Millicom International Cellular at about US$84.88 is still offering value after a strong run, or if most of the easy gains are already behind it.
• The stock has recent returns of 0.8% over 7 days, 13.3% over 30 days, 50.1% year to date and 177.5% over 1 year, with a very large 3-year gain and a more than 2x 5-year gain that can all influence how you think about risk and reward today.
• Recent coverage around Millicom International Cellular has focused on its position in the wireless telecom space and investor interest following its strong share price performance. This context matters because sentiment shifts can affect how the same fundamentals are priced in the market.
• Millicom International Cellular currently has a valuation score of 5 out of 6, and the rest of this article will walk through what that means across different valuation methods, then finish with a way to think about value that goes beyond the usual ratios and discount models.

Millicom International Cellular delivered 177.5% returns over the last year. See how this stacks up to the rest of the Wireless Telecom industry.

Approach 1: Millicom International Cellular Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash a company may generate in the future and discounts those amounts back to today to arrive at an implied value per share. It is essentially asking what all those future cash flows are worth in today's dollars.

For Millicom International Cellular, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is about $802.8 million. Analysts provide explicit Free Cash Flow estimates out to 2028, with Simply Wall St extrapolating further so that projected Free Cash Flow in 2035 is $1,403.3 million, all kept in $ for consistency.

Pulling those projections together, the DCF model arrives at an estimated intrinsic value of about $181.74 per share, compared with the current share price of about $84.88. That gap implies the stock is 53.3% undervalued on this model. This indicates that the market price is materially below the value implied by the projected cash flows.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Millicom International Cellular is undervalued by 53.3%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Millicom International Cellular.

Approach 2: Millicom International Cellular Price vs Earnings

For a profitable company, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It ties the share price directly to current earnings, which many investors treat as a core anchor for value.

What counts as a “normal” P/E depends on how the market views a company’s growth potential and risk. Higher growth and perceived resilience can support a higher P/E, while more uncertainty or weaker growth expectations usually point to a lower one.

Millicom International Cellular currently trades on a P/E of 10.81x. That sits below the Wireless Telecom industry average of about 17.33x and well below the peer group average of 39.57x. Simply Wall St also calculates a “Fair Ratio” of 14.10x for Millicom International Cellular, which is the P/E level suggested by its earnings growth profile, industry, profit margins, market cap and risk factors.

This Fair Ratio is more tailored than a simple comparison with peers or the industry because it adjusts for Millicom International Cellular’s specific characteristics rather than assuming all telecom stocks deserve the same multiple. Compared with the current 10.81x, the Fair Ratio of 14.10x points to the shares trading below that modelled level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Millicom International Cellular Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St give you a clear story behind the numbers by linking your view of Millicom International Cellular to a set of revenue, earnings and margin assumptions, turning that into a fair value that you can compare with the current price. This updates automatically when new news or earnings arrive, and allows one investor to back a more optimistic Millicom International Cellular Narrative with a fair value around US$89 while another uses a more cautious Narrative closer to US$46.65, all within the Community page where millions of investors share and refine their views.

For Millicom International Cellular however, we will make it really easy for you with previews of two leading Millicom International Cellular Narratives:

Each one takes the same company data and builds a different story around future earnings, margins and what a fair value could look like. Your job is to decide which set of assumptions feels closer to how you see the business.

🐂 Millicom International Cellular Bull Case

Fair value in this bullish narrative: US$89.00 per share.

Current price vs this fair value: about 4.6% below that narrative fair value.

Revenue growth assumption: 15.42% a year.

• Assumes Colombia integration, higher postpaid penetration and fintech growth support stronger revenue and earnings than current consensus implies.
• Sees upside from acquisitions in markets like Uruguay, Ecuador, Colombia and Costa Rica, with synergies and cross market bundling not fully reflected in current pricing.
• Flags real risks around currency moves, capital intensity, competition and regulation, but concludes that analysts at the optimistic end see room for a higher value if execution stays on track.

🐻 Millicom International Cellular Bear Case

Fair value in this cautious narrative: about US$46.65 per share.

Current price vs this fair value: about 82.0% above that narrative fair value.

Revenue growth assumption: 12.83% a year.

• Focuses on pressure from low priced competitors, the shift away from traditional voice and SMS, and ongoing capital needs that could strain margins and cash flow.
• Points to foreign exchange swings, economic conditions and tighter regulation in key Latin American markets as ongoing constraints on how much of the operational progress reaches the bottom line.
• Accepts that postpaid, digital and B2B initiatives are improving the business mix, but concludes that the price implied by this narrative leaves less room if growth or profitability fall short.

If you want to see how these narratives are built line by line, and how community views cluster around the bullish and bearish cases, it is worth stepping through the full versions before making any calls on Millicom International Cellular at today’s price. See what the community is saying about Millicom International Cellular

Do you think there's more to the story for Millicom International Cellular? Head over to our Community to see what others are saying!

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.

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