Shemaroo Entertainment Limited (NSE:SHEMAROO): Is Growth Priced In?
Shemaroo Entertainment Limited (NSE:SHEMAROO) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of ₹405.45 is based on unrealistic expectations. 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 Shemaroo Entertainment
Has the SHEMAROO train has slowed down?
Shemaroo Entertainment is poised for extremely high earnings growth in the near future. Expectations from 2 analysts are extremely positive with earnings per share estimated to surge from current levels of ₹27.513 to ₹45.881 over the next three years. This indicates an estimated earnings growth rate of 21% per year, on average, which signals a market-beating outlook in the upcoming years.
Is SHEMAROO available at a good price after accounting for its growth?
Shemaroo Entertainment is trading at quite low price-to-earnings (PE) ratio of 14.68x. This tells us the stock is undervalued relative to the current IN market average of 17.4x , and undervalued based on its latest annual earnings update compared to the entertainment average of 24.33x . This multiple is a median of profitable companies of 24 Entertainment companies in IN including BGIL Films & Technologies, 52 Weeks Entertainment and Eros International Media.
Given that SHEMAROO's price-to-earnings of 14.68x lies below the industry average, this already indicates that the company could be potentially undervalued. But, seeing as Shemaroo Entertainment 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 14.68x and expected year-on-year earnings growth of 21% give Shemaroo Entertainment a very low PEG ratio of 0.70x. So, when we include the growth factor in our analysis, Shemaroo Entertainment appears relatively cheap , based on the fundamentals.
What this means for you:
SHEMAROO'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 urge you to complete your research by taking a look at the following:
- Financial Health: Are SHEMAROO’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 SHEMAROO 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 SHEMAROO'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.
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 firstname.lastname@example.org.
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.
Shemaroo Entertainment Limited engages in the distribution of content for broadcasting of satellite channels, physical formats, and emerging digital technologies in India.
Proven track record with imperfect balance sheet.