Ainsworth Game Technology Limited (ASX:AGI): Is Now A Good Time To Buy?

Ainsworth Game Technology Limited (ASX:AGI) is considered a high-growth stock, but its last closing price of A$1.05 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. Below I will be talking through a basic metric which will help answer this question. Check out our latest analysis for Ainsworth Game Technology

>Where's the growth?

Analysts are predicting good growth prospects for Ainsworth Game Technology over the next couple of years. Expectations from 7 analysts are buoyant with earnings per share estimated to rise from today's level of A$0.0846 to A$0.105 over the next three years. This results in an annual growth rate of 14.87%, on average, which illustrates an optimistic outlook in the near term.

Can AGI's share price be justified by its earnings growth?

Ainsworth Game Technology is available at a price-to-earnings ratio of 12.41x, showing us it is undervalued relative to the current AU market average of 0x , and genuinely an outlier, compared the hospitality industry, which on average has been loss-making over the past year .

Given that AGI's price-to-earnings of 12.41x lies below the industry average, this already indicates that the company could be potentially undervalued. However, seeing as Ainsworth Game Technology 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 12.41x and expected year-on-year earnings growth of 14.87% give Ainsworth Game Technology a low PEG ratio of 0.83x. Based on this growth, Ainsworth Game Technology's stock can be considered fairly valued , based on fundamental analysis.

What this means for you:

AGI'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: Is AGI’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 AGI 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 AGI'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.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.