Does The Hype Around Credit Corp Group Limited’s (ASX:CCP) Growth Justify Its March Share Price?

Credit Corp Group Limited (ASX:CCP) is considered a high growth stock. However its last closing price of A$22.6 left investors wondering whether this growth has already been factored into the share price. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

Check out our latest analysis for Credit Corp Group

What can we expect from CCP in the future?

Analysts are predicting good growth prospects for Credit Corp Group over the next couple of years. Expectations from 5 analysts are bullish with earnings per share estimated to surge from current levels of A$1.425 to A$1.785 over the next three years. On average, this leads to a growth rate of 10% each year, which indicates a solid future in the near term.

Can CCP’s share price be justified by its earnings growth?

Credit Corp Group is available at a price-to-earnings ratio of 15.86x, showing us it is undervalued relative to the current AU market average of 16.37x , and overvalued based on current earnings compared to the Consumer Finance industry average of 9.2x .

ASX:CCP Price Estimation Relative to Market, March 16th 2019
ASX:CCP Price Estimation Relative to Market, March 16th 2019

We already know that CCP appears to be overvalued when compared to its industry average. But, seeing as Credit Corp Group 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 15.86x and expected year-on-year earnings growth of 10% give Credit Corp Group a higher PEG ratio of 1.55x. Based on this growth, Credit Corp Group’s stock can be considered a bit overvalued , based on fundamental analysis.

What this means for you:

CCP’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 highly recommend you to complete your research by taking a look at the following:

  1. Financial Health: Are CCP’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 CCP 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 CCP’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.