Is It Too Late To Buy Black Knight, Inc. (NYSE:BKI) At Its June Price?

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Growth expectations for Black Knight, Inc. (NYSE:BKI) are high, but many investors are starting to ask whether its last close at $60.58 can still be rationalized by the future potential. Below I will be talking through a basic metric which will help answer this question.

Check out our latest analysis for Black Knight

Exciting times ahead?

Black Knight is poised for extremely high earnings growth in the near future. Expectations from 11 analysts are extremely bullish with earnings per share estimated to surge from current levels of $1.121 to $1.463 over the next three years. On average, this leads to a growth rate of 18% each year, which signals a market-beating outlook in the upcoming years.

Is BKI available at a good price after accounting for its growth?

Black Knight is trading at price-to-earnings (PE) ratio of 54.04x, this tells us the stock is overvalued compared to the US market average ratio of 17.9x , and overvalued based on current earnings compared to the IT industry average of 35.16x .

NYSE:BKI Price Estimation Relative to Market, June 20th 2019
NYSE:BKI Price Estimation Relative to Market, June 20th 2019

After looking at BKI’s value based on current earnings, we can see it seems overvalued relative to other companies in the industry. But, since Black Knight is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 54.04x and expected year-on-year earnings growth of 18% give Black Knight a quite high PEG ratio of 3.03x. Based on this growth, Black Knight’s stock can be considered overvalued , based on its fundamentals.

What this means for you:

BKI’s current overvaluation could signal a potential selling opportunity to reduce your exposure to the stock, or it you’re a potential investor, now may not 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 urge you to complete your research by taking a look at the following:

  1. Financial Health: Are BKI’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 BKI 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 BKI’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.