Have Investors Priced In BE Semiconductor Industries N.V.’s (AMS:BESI) Growth?

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BE Semiconductor Industries N.V. (AMS:BESI) is considered a high-growth stock, but its last closing price of €20.81 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.

Check out our latest analysis for BE Semiconductor Industries

Can we expect BESI to keep growing?

BE Semiconductor Industries is poised for significantly high earnings growth in the near future. Expectations from 5 analysts are extremely positive with earnings per share estimated to surge from current levels of €1.465 to €2.068 over the next three years. This results in an annual growth rate of 20%, on average, which indicates an exceedlingly positive future in the near term.

Can BESI’s share price be justified by its earnings growth?

Stocks like BE Semiconductor Industries, with a price-to-earnings (P/E) ratio of 14.2x, always catch the eye of investors on the hunt for a bargain. In isolation, this metric can be a bit too simplistic but in comparison to benchmarks, it tells us that BESI is undervalued relative to the current NL market average of 16.8x , and undervalued based on its latest annual earnings update compared to the Semiconductor average of 21.99x .

ENXTAM:BESI Price Estimation Relative to Market, June 10th 2019
ENXTAM:BESI Price Estimation Relative to Market, June 10th 2019

Given that BESI’s price-to-earnings of 14.2x lies below the industry average, this already indicates that the company could be potentially undervalued. But, seeing as BE Semiconductor Industries 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 14.2x and expected year-on-year earnings growth of 20% give BE Semiconductor Industries a very low PEG ratio of 0.71x. This tells us that when we include its growth in our analysis BE Semiconductor Industries’s stock can be considered relatively cheap , based on the fundamentals.

What this means for you:

BESI’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:

  1. Financial Health: Are BESI’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 BESI 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 BESI’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.

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 editorial-team@simplywallst.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.