Is Nyrstar NV's (ENXTBR:NYR) Growth Strong Enough To Justify Its June Share Price?

Looking at Nyrstar NV’s (ENXTBR:NYR) fundamentals some investors are wondering if its last closing price of €4.664 represents a good value for money for this high growth stock. Let’s look into this by assessing NYR's expected growth over the next few years. View out our latest analysis for Nyrstar

Where's the growth?

If you are bullish about Nyrstar's growth potential then you are certainly not alone. Expectations from 9 analysts are extremely bullish with earnings per share estimated to rise from today's level of €0.100 to €0.739 over the next three years. This indicates an estimated earnings growth rate of 41.08% per year, on average, which illustrates a highly optimistic outlook in the near term.

Is NYR's share price justifiable by its earnings growth?

Nyrstar is looking rather expensive based on its price-to-earnings (PE) ratio of 46.45x. This illustrates that Nyrstar is overvalued compared to the BE market average ratio of 14.33x , and overvalued based on current earnings compared to the metals and mining industry average of 12.03x .

We understand NYR seems to be overvalued based on its current earnings, compared to its industry peers. However, to properly examine the value of a high-growth stock such as Nyrstar, we must reflect its earnings growth into the valuation. I find that the PEG ratio is simple yet effective for this exercise. A PE ratio of 46.45x and expected year-on-year earnings growth of 41.08% give Nyrstar an acceptable PEG ratio of 1.13x. This tells us that when we include its growth in our analysis Nyrstar's stock can be considered slightly overvalued , based on fundamental analysis.

What this means for you:

NYR'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: Is NYR’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 NYR 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 NYR'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.