Is Ingenico Group - GCS (EPA:ING) Undervalued After Accounting For Its Future Growth?

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Ingenico Group - GCS (EPA:ING) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of €75.68 is based on unrealistic expectations. Let’s look into this by assessing ING's expected growth over the next few years.

Check out our latest analysis for Ingenico Group - GCS

What are the future expectations?

Ingenico Group - GCS is poised for significantly high earnings growth in the near future. Expectations from 15 analysts are extremely bullish with earnings per share estimated to rise from today's level of €3.049 to €4.872 over the next three years. On average, this leads to a growth rate of 16% each year, which illustrates a highly optimistic outlook in the near term.

Can ING's share price be justified by its earnings growth?

As the legendary value investor Ben Graham once said, “Price is what you pay, value is what you get.” Ingenico Group - GCS is trading at price-to-earnings (PE) ratio of 24.82x, which tells us the stock is overvalued based on current earnings compared to the Electronic industry average of 12.03x , and overvalued compared to the FR market average ratio of 17.89x .

We understand ING seems to be overvalued based on its current earnings, compared to its industry peers. But, since Ingenico Group - GCS is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 24.82x and expected year-on-year earnings growth of 16% give Ingenico Group - GCS a higher PEG ratio of 1.57x. This tells us that when we include its growth in our analysis Ingenico Group - GCS's stock can be considered a bit overvalued , based on fundamental analysis.

What this means for you:

ING'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 urge you to complete your research by taking a look at the following:

1. Financial Health: Are ING’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 ING 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 ING'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.