Looking at accesso Technology Group plc (AIM:ACSO)’s fundamentals some investors are wondering if its last closing price of £19.125 represents a good value for money for this high growth stock. When investors want to determine if the value is still there, I usually recommend a few key checks. Let’s see how ACSO measures up against them. View our latest analysis for accesso Technology Group
Can we expect ACSO to keep growing?
Analystss are predicting great growth prospects for accesso Technology Group over the next year. We should see 54.8% earnings growth and estimates for earnings per share range anywhere from $0.68 to $0.68.This means earnings will be above what has been seen in the past few years.
In the same period revenue is expected to increase from $102 Million to $193 Million in 2019 and profits (net income) are predicted to grow from $7 Million to $18 Million in 2018, roughly growing 2.4x. Margins are expected to be not high but still acceptable at 9.3% during this time as well.
What is accesso Technology Group’s value based on current earnings?accesso Technology Group is trading at price to earnings (PE) ratio of 72.8x, this also tells us the stock is overvalued based on current earnings compared to the Tech industry average of 39.5x and overvalued when compared to the GB market average of 28.3x .
P/E ratio is simply a stock’s price divided by its earnings per share (EPS). It is a straightforward and popular way of assessing how much investors are willing to pay for each dollar a company earns.
So does ACSO’s earnings growth justify its valuation?
We understand ACSO seems to be overvalued based on current earnings when we compare it to its industry peers.But since accesso Technology Group is a high growth stock, we must also account for its earnings growth by using calculation called PEG ratio.
The PEG ratio (price/earnings to growth ratio) is a valuation metric used to assess the relative trade-off between the price of a stock, the earnings per share (EPS), and the company’s expected growth. Since P/E ratio is in general higher for a company with a higher growth rate, using just the P/E ratio would make high-growth companies appear overvalued relative to others. By dividing the P/E ratio by the earnings growth rate, the resulting ratio is considered to provide a more complete picture when comparing companies with different growth rates.Expected 54.8% growth in earnings next year and P/E ratio of 72.8x give accesso Technology Group a higher PEG ratio of 1.3x. This means that when accounting for its growth accesso Technology Group’s stock can be viewed as slightly overvalued based on the fundamenals.
What next? If you want to look into accesso Technology Group further I recommend you take a look at our latest FREE analysis report. If you are not interested in ACSO anymore, you can use our free platform to see my list of stocks which are undervalued when taking in account their future growth potential.