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V2 Retail Limited (NSE:V2RETAIL) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of ₹147.9 is based on unrealistic expectations. Let’s look into this by assessing V2RETAIL’s expected growth over the next few years.
Can we expect V2RETAIL to keep growing?
V2 Retail is poised for significantly high earnings growth in the near future. Expectations from 2 analysts are extremely bullish with earnings per share estimated to rise from today’s level of ₹6.02 to ₹10.996 over the next three years. This results in an annual growth rate of 19%, on average, which indicates an exceedlingly positive future in the near term.
Is V2RETAIL available at a good price after accounting for its growth?
As the legendary value investor Ben Graham once said, “Price is what you pay, value is what you get.” V2 Retail is trading at price-to-earnings (PE) ratio of 24.61x, which tells us the stock is undervalued based on its latest annual earnings update compared to the Multiline Retail average of 59.53x , and overvalued compared to the IN market average ratio of 14.68x .
V2 Retail’s price-to-earnings ratio stands at 24.61x, which is low, relative to the industry average. This already suggests that the stock could be undervalued. However, seeing as V2 Retail 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 24.61x and expected year-on-year earnings growth of 19% give V2 Retail a higher PEG ratio of 1.31x. Based on this growth, V2 Retail’s stock can be considered slightly overvalued , based on the fundamentals.
What this means for you:
V2RETAIL’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:
- Financial Health: Are V2RETAIL’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 V2RETAIL 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 V2RETAIL’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.