Does IntriCon Corporation’s (NASDAQ:IIN) July Stock Price Reflect Its Future Growth?

IntriCon Corporation (NASDAQ:IIN) is considered a high-growth stock, but its last closing price of $18.05 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. Let’s look into this by assessing IIN’s expected growth over the next few years.

Check out our latest analysis for IntriCon

What are the future expectations?

IntriCon’s extremely high growth potential in the near future is attracting investors. Expectations from 3 analysts are extremely bullish with earnings per share estimated to surge from current levels of $0.690 to $1.337 over the next three years. This results in an annual growth rate of 46%, on average, which signals a market-beating outlook in the upcoming years.

Is IIN’s share price justifiable by its earnings growth?

IntriCon is available at price-to-earnings ratio of 26.14x, showing us it is undervalued based on its latest annual earnings update compared to the Medical Equipment average of 42.57x , and overvalued compared to the US market average ratio of 18.03x .

NasdaqGM:IIN Price Estimation Relative to Market, July 31st 2019
NasdaqGM:IIN Price Estimation Relative to Market, July 31st 2019

We already know that IIN appears to be undervalued based on its PE ratio, compared to the industry average. However, since IntriCon is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 26.14x and expected year-on-year earnings growth of 46% give IntriCon a very low PEG ratio of 0.57x. This tells us that when we include its growth in our analysis IntriCon’s stock can be considered relatively cheap , based on its fundamentals.

What this means for you:

IIN’s current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you’re a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:

  1. Financial Health: Are IIN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Past Track Record: Has IIN been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of IIN’s historicals for more clarity.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.