Schaffner Holding AG (SWX:SAHN) is considered a high-growth stock, but its last closing price of CHF348 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. 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 Schaffner Holding
Where’s the growth?Schaffner Holding’s extremely high growth potential in the near future is attracting investors. Expectations from 2 analysts are extremely positive with earnings forecasted to rise significantly from today’s level of CHF13.439 to CHF26.005 over the next three years. This results in an annual growth rate of 33.48%, on average, which signals a market-beating outlook in the upcoming years.
Is SAHN’s share price justified by its earnings growth?
SAHN is trading at price-to-earnings (PE) ratio of 25.89x, which suggests that Schaffner Holding is undervalued based on its latest annual earnings update compared to the electronic average of 26.22x , and overvalued compared to the CH market average ratio of 21.78x .
Schaffner Holding’s price-to-earnings ratio stands at 25.89x, which is low, relative to the industry average. This already suggests that the stock could be undervalued. However, to be able to properly assess the value of a high-growth stock such as Schaffner Holding, we must incorporate its earnings growth in our valuation. The PEG ratio is a great calculation to take account of growth in the stock’s valuation. A PE ratio of 25.89x and expected year-on-year earnings growth of 33.48% give Schaffner Holding a very low PEG ratio of 0.77x. This tells us that when we include its growth in our analysis Schaffner Holding’s stock can be considered relatively cheap , based on its fundamentals.
What this means for you:
SAHN’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 urge you to complete your research by taking a look at the following:
- Financial Health: Is SAHN’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 SAHN 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 SAHN’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.