Growth expectations for Park National Corporation (NYSEMKT:PRK) are high, but many investors are starting to ask whether its last close at $98.66 can still be rationalized by the future potential. Let’s look into this by assessing PRK’s expected growth over the next few years.
Has the PRK train slowed down?
Park National’s growth potential is very attractive. The consensus forecast from 3 analysts is extremely bullish with earnings per share estimated to surge from current levels of $6.204 to $6.704 over the next three years. This results in an annual growth rate of 16%, on average, which indicates an exceedlingly positive future in the near term.
Is PRK available at a good price after accounting for its growth?
Park National is trading at quite low price-to-earnings (PE) ratio of 15.9x. This tells us the stock is undervalued relative to the current US market average of 18.2x , and overvalued based on current earnings compared to the Banks industry average of 12.63x .
We already know that PRK appears to be overvalued when compared to its industry average. But, since Park National is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 15.9x and expected year-on-year earnings growth of 16% give Park National a low PEG ratio of 0.98x. This means that, when we account for Park National’s growth, the stock can be viewed as fairly valued , based on the fundamentals.
What this means for you:
PRK’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 urge you to complete your research by taking a look at the following:
- Financial Health: Are PRK’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.
- Past Track Record: Has PRK 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 PRK’s historicals for more clarity.
- 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 email@example.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.