Does The Hype Around Midsona AB (publ)’s (STO:MSON B) Growth Justify Its April Share Price?

Growth expectations for Midsona AB (publ) (STO:MSON B) are high, but many investors are starting to ask whether its last close at SEK50.5 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.

View our latest analysis for Midsona

Can we expect MSON B to keep growing?

Midsona is poised for extremely high earnings growth in the near future. Expectations from 2 analysts are extremely bullish with earnings per share estimated to surge from current levels of SEK2.804 to SEK5.378 over the next three years. This indicates an estimated earnings growth rate of 21% per year, on average, which indicates an exceedlingly positive future in the near term.

Is MSON B available at a good price after accounting for its growth?

Midsona is available at price-to-earnings ratio of 18.01x, showing us it is overvalued based on current earnings compared to the Personal Products industry average of 17.77x , and overvalued compared to the SE market average ratio of 16.95x .

OM:MSON B Price Estimation Relative to Market, April 1st 2019
OM:MSON B Price Estimation Relative to Market, April 1st 2019

We understand MSON B seems to be overvalued based on its current earnings, compared to its industry peers. But, since Midsona is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 18.01x and expected year-on-year earnings growth of 21% give Midsona a low PEG ratio of 0.85x. Based on this growth, Midsona’s stock can be considered fairly valued , based on the fundamentals.

What this means for you:

MSON B’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 MSON B’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 MSON B 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 MSON B’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.