Want To Invest In Ten Entertainment Group plc (LON:TEG) Today? Read This First

Growth expectations for Ten Entertainment Group plc (LON:TEG) are high, but many investors are starting to ask whether its last close at £2.41 can still be rationalized by the future potential. 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 Ten Entertainment Group

What are the future expectations?

According to the analysts covering the company, the following few years should bring about good growth prospects for Ten Entertainment Group. Expectations from 5 analysts are bullish with earnings per share estimated to rise from today's level of £0.132 to £0.206 over the next three years. On average, this leads to a growth rate of 12% each year, which indicates a solid future in the near term.

Is TEG's share price justified by its earnings growth?

Ten Entertainment Group is available at price-to-earnings ratio of 18.24x, showing us it is overvalued based on current earnings compared to the Hospitality industry average of 17.67x , and overvalued compared to the GB market average ratio of 15.78x .

After looking at TEG's value based on current earnings, we can see it seems overvalued relative to other companies in the industry. But, to be able to properly assess the value of a high-growth stock such as Ten Entertainment Group, 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 18.24x and expected year-on-year earnings growth of 12% give Ten Entertainment Group a higher PEG ratio of 1.52x. So, when we include the growth factor in our analysis, Ten Entertainment Group appears a bit overvalued , based on its fundamentals.

What this means for you:

TEG'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 TEG’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 TEG 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 TEG'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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at 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.