Does John Bean Technologies Corporation’s (NYSE:JBT) Stock Price Account For Its Growth?

John Bean Technologies Corporation (NYSE:JBT) closed yesterday at $89.06, which left some investors asking whether the high earnings potential can still be justified at this price. Let’s look into this by assessing JBT’s expected growth over the next few years.

View our latest analysis for John Bean Technologies

What can we expect from JBT in the future?

John Bean Technologies is poised for extremely high earnings growth in the near future. Expectations from 9 analysts are extremely positive with earnings forecasted to rise significantly from today’s level of $3.273 to $5.448 over the next three years. This indicates an estimated earnings growth rate of 17% per year, on average, which signals a market-beating outlook in the upcoming years.

Is JBT’s share price justified by its earnings growth?

JBT is trading at price-to-earnings (PE) ratio of 27.21x, which suggests that John Bean Technologies is overvalued based on current earnings compared to the Machinery industry average of 20.45x , and overvalued compared to the US market average ratio of 17.38x .

NYSE:JBT Price Estimation Relative to Market, March 11th 2019
NYSE:JBT Price Estimation Relative to Market, March 11th 2019

After looking at JBT’s value based on current earnings, we can see it seems overvalued relative to other companies in the industry. However, seeing as John Bean Technologies 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 27.21x and expected year-on-year earnings growth of 17% give John Bean Technologies a higher PEG ratio of 1.6x. This tells us that when we include its growth in our analysis John Bean Technologies’s stock can be considered a bit overvalued , based on the fundamentals.

What this means for you:

JBT’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:

  1. Financial Health: Are JBT’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 JBT 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 JBT’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.