Is Harvia Oyj’s (HEL:HARVIA) Stock Available For A Good Price After Accounting For Growth?

Harvia Oyj (HEL:HARVIA) is considered a high growth stock. However its last closing price of €6.48 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.

See our latest analysis for Harvia Oyj

Where’s the growth?

Investors in Harvia Oyj have been patiently waiting for the uptick in earnings. If you believe the analysts covering the stock then the following year will be very interesting. The consensus forecast from 2 analysts is certainly positive with earnings forecasted to rise significantly from today’s level of €0.406 to €0.565 over the next three years. On average, this leads to a growth rate of 11% each year, which illustrates an optimistic outlook in the near term.

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

Harvia Oyj is trading at quite low price-to-earnings (PE) ratio of 15.95x. This tells us the stock is undervalued relative to the current FI market average of 19.74x , and undervalued based on its latest annual earnings update compared to the Leisure average of 17.44x .

HLSE:HARVIA Price Estimation Relative to Market, April 5th 2019
HLSE:HARVIA Price Estimation Relative to Market, April 5th 2019

We already know that HARVIA appears to be undervalued based on its PE ratio, compared to the industry average. But, seeing as Harvia Oyj 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 15.95x and expected year-on-year earnings growth of 11% give Harvia Oyj a higher PEG ratio of 1.45x. This tells us that when we include its growth in our analysis Harvia Oyj’s stock can be considered slightly overvalued , based on fundamental analysis.

What this means for you:

HARVIA’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 HARVIA’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. Valuation: What is HARVIA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HARVIA is currently mispriced by the market.
  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.