Does QANTM Intellectual Property Limited’s (ASX:QIP) November Stock Price Reflect Its Future Growth?

QANTM Intellectual Property Limited (ASX:QIP) is considered a high growth stock. However its last closing price of A$1.265 left investors wondering whether this growth has already been factored into the share price. Let’s look into this by assessing QIP’s expected growth over the next few years.

Check out our latest analysis for QANTM Intellectual Property

What can we expect from QIP in the future?

The excitement around QANTM Intellectual Property’s growth potential is not unfounded. Analyst expectations are extremely positive with earnings forecasted to rise significantly from today’s level of A$0.0716 to A$0.128 over the next three years. This results in an annual growth rate of 16%, on average, which signals a market-beating outlook in the upcoming years.

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

QIP is available at a PE (price-to-earnings) ratio of 17.67x today, which tells us the stock is undervalued based on its latest annual earnings update compared to the professional services average of 20.61x , and overvalued compared to the AU market average ratio of 15.38x .

ASX:QIP PE PEG Gauge November 20th 18
ASX:QIP PE PEG Gauge November 20th 18

Given that QIP’s price-to-earnings of 17.67x lies below the industry average, this already indicates that the company could be potentially undervalued. But, seeing as QANTM Intellectual Property is perceived as a high-growth stock, we must also account for its earnings growth, which is captured in the PEG ratio. A PE ratio of 17.67x and expected year-on-year earnings growth of 16% give QANTM Intellectual Property an acceptable PEG ratio of 1.12x. This means that, when we account for QANTM Intellectual Property’s growth, the stock can be viewed as slightly overvalued , based on its fundamentals.

What this means for you:

QIP’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 QIP’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. Valuation: What is QIP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether QIP is currently mispriced by the market.
  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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.