Looking at Aeterna Zentaris Inc’s (TSX:AEZS) fundamentals some investors are wondering if its last closing price of CA$2.29 represents a good value for money for this high growth stock. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors. View our latest analysis for Aeterna Zentaris
Exciting times ahead?One reason why investors are attracted to AEZS is the high growth potential in the near future. Expectations from 2 analysts are extremely bullish with earnings per share estimated to rise from today’s level of $0.112 to $0.239 over the next three years. On average, this leads to a growth rate of 23.87% each year, which illustrates a highly optimistic outlook in the near term.
Is AEZS available at a good price after accounting for its growth?
Aeterna Zentaris is available at a price-to-earnings ratio of 15.82x, showing us it is overvalued compared to the CA market average ratio of 15.72x , and undervalued based on its latest annual earnings update compared to the biotechs average of 25.39x .
Given that AEZS’s price-to-earnings of 15.82x lies below the industry average, this already indicates that the company could be potentially undervalued. But, seeing as Aeterna Zentaris 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 15.82x and expected year-on-year earnings growth of 23.87% give Aeterna Zentaris a very low PEG ratio of 0.66x. This means that, when we account for Aeterna Zentaris’s growth, the stock can be viewed as relatively cheap , based on fundamental analysis.
What this means for you:
AEZS’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:
- Financial Health: Is AEZS’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 AEZS 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 AEZS’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.