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Growth expectations for Gr. Sarantis S.A. (ATH:SAR) are high, but many investors are starting to ask whether its last close at €7.53 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.
Has the SAR train has slowed down?
Investors in Gr. Sarantis 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 4 analysts is buoyant with earnings per share estimated to surge from current levels of €0.480 to €0.655 over the next three years. On average, this leads to a growth rate of 12% each year, which signals a market-beating outlook in the upcoming years.
Can SAR’s share price be justified by its earnings growth?
Gr. Sarantis is available at a price-to-earnings ratio of 15.68x, showing us it is overvalued compared to the GR market average ratio of 15.65x , and undervalued based on its latest annual earnings update compared to the Personal Products average of 16.49x .
Gr. Sarantis’s price-to-earnings ratio stands at 15.68x, which is low, relative to the industry average. This already suggests that the stock could be undervalued. But, to be able to properly assess the value of a high-growth stock such as Gr. Sarantis, 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 15.68x and expected year-on-year earnings growth of 12% give Gr. Sarantis a higher PEG ratio of 1.32x. This means that, when we account for Gr. Sarantis’s growth, the stock can be viewed as slightly overvalued , based on its fundamentals.
What this means for you:
SAR’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:
- Financial Health: Are SAR’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 SAR 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 SAR’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.
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 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.