accesso Technology Group plc (LON:ACSO) is considered a high-growth stock, but its last closing price of £8.4 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.
Should you get excited about ACSO’s future?
One reason why investors are attracted to ACSO is the high growth potential in the near future. The consensus forecast from 5 analysts is extremely bullish with earnings per share estimated to rise from today’s level of $0.373 to $0.711 over the next three years. This indicates an estimated earnings growth rate of 40% per year, on average, which signals a market-beating outlook in the upcoming years.
Is ACSO available at a good price after accounting for its growth?
ACSO is available at a PE (price-to-earnings) ratio of 29.38x today, which tells us the stock is overvalued based on current earnings compared to the Electronic industry average of 22.5x , and overvalued compared to the GB market average ratio of 15.85x .
We understand ACSO seems to be overvalued based on its current earnings, compared to its industry peers. But, seeing as accesso Technology Group 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 29.38x and expected year-on-year earnings growth of 40% give accesso Technology Group a very low PEG ratio of 0.74x. So, when we include the growth factor in our analysis, accesso Technology Group appears relatively cheap , based on the fundamentals.
What this means for you:
ACSO’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: Are ACSO’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 ACSO 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 ACSO’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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.